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

Cuestas, J.C., Monfort, M. and Ordóñez, J. (2011) How big is the 'German locomotive'? A perspective from Central and Eastern European countries' unemployment rates. Working Paper. Department of Economics, University of Sheffield ISSN 1749-8368

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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.

Item Type: Monograph (Working Paper)
Copyright, Publisher and Additional Information: The Sheffield Economics Research Paper (SERP) series offers a forum for the research output of the academic staff and research students of the Department of Economics, University of Sheffield. Papers are reviewed for quality and presentation by a departmental editor. However, the contents and opinions expressed remain the responsibility of the authors. All papers may be downloaded free on the understanding that the contents are preliminary and therefore permission from the author(s) should be sought before they are referenced.
Keywords: transition economies, unemployment, economic cycle, nonlinearities, economic integration
Institution: The University of Sheffield
Academic Units: The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series
Depositing User: Repository Officer
Date Deposited: 13 Jun 2011 16:26
Last Modified: 08 Jun 2014 05:38
Published Version: http://www.shef.ac.uk/economics/research/serps/yea...
Status: Published
Publisher: Department of Economics, University of Sheffield
Identification Number: Sheffield Economic Research Paper Series 2011008
URI: http://eprints.whiterose.ac.uk/id/eprint/43082

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