A sectorial assessment of the typology of economic crises in selected Central and Eastern European economies

By dating business cycles at the sectorial level, this paper analyses the two recent types of economic crises, namely the 2007–2009 Global Financial Crisis and the COVID-19 health crisis. Using PROBIT and quantile regression models and considering the current state of the economic sectors this study provides a method to depict the trends for the evolution of economy as a whole. Furthermore, it highlights the potential occurrence of extreme values of economic growth in the short term. Our findings demonstrate a clear and significant impact of sector-specific variables on the overall economy and contribute to a deeper understanding of the dynamics of economic crises. Models for estimating recession probabilities and extreme values of economic activity further emphasize the clear distinction between the two typologies of economic crisis. Analyzing the characteristics of recent economic crises from a sectorial perspective is essential for timely identifying macroeconomic vulnerabilities and recession triggers. Identifying the most affected economic sectors by recession type helps policymakers prioritize resources and interventions, ensuring that economic support, such as financial aid, job retraining, or stimulus packages is directed toward stabilizing the most impacted sectors. This understanding supports the development of effective policy recommendations for a timely and sustainable recovery from adverse shocks.Understanding the characteristics of the two recent types of economic crises, namely the financial crisis and the COVID-19 health crisis, from a sectoral point of view is of utmost importance to highlight macroeconomic vulnerabilities and triggers of recessions. Determining probabilities of initiating a contraction period in different sectors of the economy can mitigate the high volatility of sectoral economic performance, saving companies' financial solvency and employment stability, and ultimately avoiding a macroeconomic recession. Such records facilitate the formulation of relevant economic policy recommendations for prompt and sustainable recovery following the materialization of adverse shocks.