Panel Cointegration and Causality Among Socioeconomic Indicators in CEE Regions: Insights for Regional Economic Resilience and Sustainable Development

After the powerful socioeconomic shock of the fall of the communist regime in the early 90s, the ten countries in Central and Eastern Europe (CEE) analyzed in this study became growing Member States of the European Union (EU). However, they faced the 2008 financial crisis, the 2019 COVID shock, and sharp income disparities both at the regional level and compared to the countries in Western EU. This study explores the differences in sustainable regional development, modeling with Panel Autoregressive Distributed Lag (ARDL) to analyze relationships across multiple cross-sections in the short and long run, as well as with Cointegration Tests and Granger Panel Causality to detect evidence of causality among the variables in the study. The analysis covers 2012–2022, a period in which the Member States from CEE had the best access to generous structural and cohesion EU funds and that includes both the post-financial crisis convergence phase and the COVID-19 shock, enabling us to capture regional resilience dynamics. The results indicate that capital formation and population density positively influence disposable household income in the long run, across CEE regions, while unemployment and life expectancy exert negative effects. The results of this paper can be of use to decision-making institutions seeking to implement proactive socioeconomic policies in the lagging regions, before the next crisis, focused on capital investments, reducing unemployment, and bridging the rural–urban divide. The study contributes to the literature on inclusive and sustainable economic development at the CEE regional level.