DP2285 Limited Macroeconomic Convergence in Transition Countries

Author(s): Evzen Kocenda
Publication Date: November 1999
Keyword(s): Convergence, Economic Integration, Panel Unit-Root Test, Transition
JEL(s): C23, E65, F15, O11, P52
Programme Areas: Transition Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2285

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.