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Comparing economic dynamics in the EU and CEE accession countries

Author

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  • Süppel, Ralph

Abstract

This paper presents evidence for structural differences in economic growth dynamics between the current EU and the central- and eastern European accession countries. Two important results emerge from the analysis. First, accession countries have posted higher average growth and wider output fluctuations than the euro area and other EU countries. Second, a set of different methodologies suggests that business cycles of accession countries have been less synchronised with the euro area than those of the United Kingdom, Sweden and Denmark. It is less clear whether accession countries are also less synchronised than the euro area "peripherals" (Greece, Portugal and Ireland). Moreover, synchrony differed across countries. Some accession economies, particularly Hungary, Poland and Slovenia, showed a close alignment with euro area fluctuations. Others, in particular the Czech Republic and Slovakia, revealed remarkable asymmetries, which are a reminder that sizeable idiosyncratic shocks remain a risk. JEL Classification: E32, E52, F31

Suggested Citation

  • Süppel, Ralph, 2003. "Comparing economic dynamics in the EU and CEE accession countries," Working Paper Series 267, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:2003267
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp267.pdf
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    References listed on IDEAS

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    1. Alberto Alesina & Robert J. Barro, 2002. "Currency Unions," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 409-436.
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    3. Robert Barro & Silvana Tenreyro, 2007. "Economic Effects Of Currency Unions," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 1-23, January.
    4. repec:bla:etrans:v:11:y:2003:i:1:p:177-196 is not listed on IDEAS
    5. Iikka Korhonen, 2003. "Some empirical tests on the integration of economic activity between the euro area and the accession countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(1), pages 177-196, March.
    6. Frenkel, Michael & Nickel, Christiane & Schmidt, Günter, 1999. "Some shocking aspects of EMU enlargement," Research Notes 99-4, Deutsche Bank Research.
    7. Fidrmuc, Jarko & Korhonen, Iikka, 2001. "Similarity of supply and demand shocks between the euro area and the accession countries," BOFIT Discussion Papers 14/2001, Bank of Finland, Institute for Economies in Transition.
    8. Michael Frenkel & Christiane Nickel, 2005. "How Symmetric are the Shocks and the Shock Adjustment Dynamics between the Euro Area and Central and Eastern European Countries?," Journal of Common Market Studies, Wiley Blackwell, vol. 43(1), pages 53-74, March.
    9. G. Kolodko, 2000. "Globalization and Catching-up. From Recession to Growth in Transition Economies," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 10.
    10. Grzegorz W. Kolodko, 2000. "Globalization and Catching-Up; From Recession to Growth in Transition Economies," IMF Working Papers 00/100, International Monetary Fund.
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    Citations

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    Cited by:

    1. Fidrmuc, Jarko & Korhonen, Iikka, 2006. "Meta-analysis of the business cycle correlation between the euro area and the CEECs," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 518-537, September.
    2. Sandrine Levasseur, 2004. "Why not euroisation?," Revue de l'OFCE, Presses de Sciences-Po, vol. 91(5), pages 121-156.
    3. Oscar Bajo-Rubio & Carmen Díaz-Roldán, 2005. "Characterizing macroeconomic shocks in the CEECs," Economic Change and Restructuring, Springer, vol. 38(3), pages 227-234, December.
    4. Groh, Alexander P. & Liechtenstein, Heinrich & Lieser, Karsten, 2008. "The European venture capital and private equity country attractiveness index(es)," IESE Research Papers D/773, IESE Business School.
    5. Ascari, Guido & Rankin, Neil, 2007. "Perpetual youth and endogenous labor supply: A problem and a possible solution," Journal of Macroeconomics, Elsevier, vol. 29(4), pages 708-723, December.
    6. Jean-Marc Figuet & Nikolay Nenovsky, 2006. "Convergence and shocks in the road to EU: Empirical investigations for Bulgaria and Romania," William Davidson Institute Working Papers Series wp810, William Davidson Institute at the University of Michigan.
    7. 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.
    8. Ignazio Angeloni & Michael Flad & Francesco Paolo Mongelli, 2007. "Monetary Integration of the New EU Member States: What Sets the Pace of Euro Adoption?," Journal of Common Market Studies, Wiley Blackwell, vol. 45(2), pages 367-409, June.
    9. Marek Jarocinski, 2010. "Responses to monetary policy shocks in the east and the west of Europe: a comparison," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(5), pages 833-868.
    10. Groh, Alexander P. & Liechtenstein, Heinrich & Canela, Miguel A., 2008. "Limited partners' perceptions of the Central Eastern European venture capital and private equity market," IESE Research Papers D/727, IESE Business School.
    11. Groh, Alexander P. & Liectenstein, Heinrich, 2009. "The first step of the capital flow from institutions to entrepreneurs: The criteria for sorting venture capital funds," IESE Research Papers D/795, IESE Business School.
    12. Fidrmuc, Jarko & Korhonen, Iikka, 2006. "Meta-analysis of the business cycle correlation between the euro area and the CEECs," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 518-537, September.
    13. repec:onb:oenbwp:y::i:124:b:1 is not listed on IDEAS

    More about this item

    Keywords

    Central and Eastern Europe; exchange rate; Kalman filter; optimal currency area; structural VAR;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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