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

Listed author(s):
  • 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)

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.

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File Function: First version, 2011
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2011008.

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Length: 37 pages
Date of creation: Apr 2011
Date of revision: Apr 2011
Handle: RePEc:shf:wpaper:2011008
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