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Economic fluctuations in Central and Eastern Europe: the facts

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  • Peter Benczur
  • Attila Ratfai

Abstract

This article provides a detailed empirical analysis of quarterly frequency dynamics in macroeconomic aggregates in 12 countries of Central and Eastern Europe (CEE). It shows that business fluctuations in CEE countries are, in general, more pronounced than in developed ones, and are of similar size as in other emerging market economies. Private consumption is particularly volatile. Relative to major developed economies government spending is dominantly procyclical, and net exports are strongly countercyclical. The most frequent country outliers are the high inflation countries of Bulgaria, Romania and Russia, especially in labour market, price and exchange rate variables. Excluding these countries from the sample makes many of the observed patterns in cyclical dynamics more homogenous, and broadly similar to ones established in developed economies.

Suggested Citation

  • Peter Benczur & Attila Ratfai, 2010. "Economic fluctuations in Central and Eastern Europe: the facts," Applied Economics, Taylor & Francis Journals, vol. 42(25), pages 3279-3292.
  • Handle: RePEc:taf:applec:v:42:y:2010:i:25:p:3279-3292
    DOI: 10.1080/00036840802112380
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    Citations

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    Cited by:

    1. Vasilev, Aleksandar, 2009. "Business cycles in Bulgaria and the Baltic countries: an RBC approach," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 148-170.
    2. Mariarosaria Comunale, 2017. "Synchronicity of real and financial cycles and structural characteristics in EU countries," CEIS Research Paper 414, Tor Vergata University, CEIS, revised 25 Sep 2017.
    3. Maria Neycheva, 2005. "The Impact of the Fisc on Macroeconomic Fluctuations in Bulgarian Economy," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 42-59.
    4. Macchiarelli, Corrado, 2013. "Similar GDP-inflation cycles. An application to CEE countries and the euro area," Research in International Business and Finance, Elsevier, vol. 27(1), pages 124-144.
    5. Tanja Broz, 2008. "The Introduction of the Euro in Central and Eastern European Countries - Is it Economically Justifiable?," Working Papers 0801, The Institute of Economics, Zagreb.
    6. Caraiani, Petre, 2012. "Stylized facts of business cycles in a transition economy in time and frequency," Economic Modelling, Elsevier, vol. 29(6), pages 2163-2173.
    7. Miguel Santos, 2016. "The Right Fit for the Wrong Reasons: Real Business Cycle in an Oil-dependent Economy," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 53(1), pages 61-94, December.
    8. Sandrine Levasseur, 2008. "Updating empirical evidence on business cycles synchronization between CEECs and the euro area : How important is the recent period," Documents de Travail de l'OFCE 2008-11, Observatoire Francais des Conjonctures Economiques (OFCE).
    9. Katarzyna Rosiak-Lada, 2008. "Stylized Facts of Macroeconomics: the Polish Experience," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 20.
    10. Ciprian Chirilă & Viorica Chirilă, 2012. "Unemployment And Business Cycles In Central And Eastern European Countries," Anale. Seria Stiinte Economice. Timisoara, Faculty of Economics, Tibiscus University in Timisoara, vol. 0, pages 486-493, November.
    11. Sandrine Levasseur, 2008. "Updating empirical evidence on business cycles synchronization between CEECs and euro area : how important is the recent period," Sciences Po publications 2008-11, Sciences Po.
    12. Shaig Adigozalov & Vugar Rahimov, 2015. "Institutional Quality, Cyclicality of Macroeconomic Policies and the Effects of Macroeconomic Shocks: Evidence from Transition Economies," IHEID Working Papers 23-2015, Economics Section, The Graduate Institute of International Studies.
    13. Slavov, Slavi T., 2008. "Measuring and modeling the effects of G-3 exchange rate fluctuations on small open economies: A natural experiment," Economic Systems, Elsevier, vol. 32(3), pages 253-273, September.
    14. Alina Barnett, 2007. "The effects of EU shocks on the newly acceded countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 12(4), pages 389-404.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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