Working Paper: CEPR ID: DP2285
Authors: Evzen Kocenda
Abstract: This paper analyzes performance of the transition economies in the Central and Eastern European (CEE) countries in terms of their convergence in selected macroeconomic fundamentals. The analysis uses monthly data on industrial output, money aggregate (M1), consumer prices and producer prices from 1991 to 1998. The analysis is carried out within distinctive groups of countries based on different trade and geographical arrangements, and uses a panel unit-root test as an econometric tool. In general, we conclude that the transition CEE countries were not successful in achieving a certain degree of natural economic integration among them so far. Certain levels of convergence occurred only for a limited number of countries at the advanced stage of transition process.
Keywords: convergence; transition; panel unit-root test; economic integration
JEL Codes: C23; E65; F15; O11; P52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Transition economies in Central and Eastern Europe have not achieved substantial macroeconomic convergence (P29) | Limited convergence in industrial output growth (F62) |
| Czech Republic, Poland, and Hungary exhibit significant convergence in industrial output growth (O47) | Limited convergence in industrial output growth (F62) |
| Limited convergence in consumer and producer prices among Baltic states (P22) | Slight convergence observed in consumer and producer prices (E31) |
| Comparable starting conditions and similar policies (J78) | Limited convergence in consumer and producer prices among Baltic states (P22) |