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How big is the 'German locomotive'? A perpective from Central and Eastern Europen countries' unemployment rates

Author

Listed:
  • Juan Carlos Cuestas

    () (Department of Economics, The University of Sheffield)

  • Mercedes Monfort

    () (Department of Economics, Jaume I University)

  • Javier Ordóñez

    () (Department of Economics, Jaume I University)

Abstract

Countries from Central and Eastern Europe have undergone a process of transition from communism to markets economies. The economic convergence, in terms of income, that these countries have achieved in recent years has been one of the cornerstones in the economic integration with Western Europe. In this paper we aim to analyze the degree of co-movement of unemployment rates in a sample of Central and Eastern European transition economies, and the role of German as the 'locomotive' in this process. We intend to test two hypotheses; first, is it possible to identify common patterns that are possibly linked to the economic convergence process in the unemployment rates cycles for this group of countries? And, second, is it possible to identify one of the main economic fundamentals that has acted as an attractor towards economic convergence? By means of nonlinear logistic smooth transition autoregressions and co-movement analysis we found that the German business cycle has acted as a common factor affecting the cyclical behavior of the unemployment rates in these countries.

Suggested Citation

  • Juan Carlos Cuestas & Mercedes Monfort & Javier Ordóñez, 2011. "How big is the 'German locomotive'? A perpective from Central and Eastern Europen countries' unemployment rates," Working Papers 2011008, The University of Sheffield, Department of Economics, revised Apr 2011.
  • Handle: RePEc:shf:wpaper:2011008
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    File URL: http://www.shef.ac.uk/economics/research/serps/articles/2011_008.html
    File Function: First version, 2011
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    Cited by:

    1. Juan Carlos Cuestas & Luis A. Gil-Alana & Karl Taylor, 2012. "Inflation convergence in Central and Eastern Europe with a view to adopting the euro," Working Papers 12-01, Asociación Española de Economía y Finanzas Internacionales.

    More about this item

    Keywords

    Transition economies; unemployment; economic cycle; nonlinearities; economic integration;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F15 - International Economics - - Trade - - - Economic Integration

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