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How Much of the Macroeconomic Variation in Eastern Europe is Attributable to External Shocks?

  • Bartosz Maćkowiak


    (Faculty of Economics and Business Studies, Humboldt University Berlin, Spandauer Strasse 1, 10178 Berlin, Germany.)

We decompose by origin the sources of the variation in real aggregate output and aggregate price level in the Czech Republic, Hungary and Poland. We find that a sizable fraction of the variation is attributable to external shocks, especially so for aggregate price level. We show that euroarea interest rate shocks can account for a significant fraction of the external spillover effects. We conclude that theoretical models of advanced transition economies and policy rules for these economies should feature a prominent role for external shocks. Comparative Economic Studies (2006) 48, 523–544. doi:10.1057/palgrave.ces.8100143

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Article provided by Palgrave Macmillan in its journal Comparative Economic Studies.

Volume (Year): 48 (2006)
Issue (Month): 3 (September)
Pages: 523-544

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Handle: RePEc:pal:compes:v:48:y:2006:i:3:p:523-544
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