Business cycle development in Czech and Slovak economies

This paper focuses on the business cycle development of Czech and Slovak economies. The main objective is to compare several methodological approaches to identify business cycles with the main theoretical sources of the economic activity movements in the analyzed periods. As both economies are of transition type, the growth business cycle concept will be considered. In this respect, deterministic as well as stochastic methods for obtaining cyclical fluctuations are applied. Czech and Slovak economies fall into the group of transition economies where the problems of insufficient number of observations and structural changes in empirical time series analysis occur. Even if there are many similarities in the institutions of both economies, the authors identified different regular periodicities of the waves. The used frequency analysis is a slightly unique approach of business cycle modeling. The analysis of business cycle movements has significant potential to improve economic policy efficiency

SPURIOUS SYNCHRONIZATION OF BUSINESS CYCLES: DYNAMIC CORRELATION ANALYSIS OF V4 COUNTRIES

Abstract KAPOUNEK, S., POMĚNKOVÁ, J.: Spurious synchronization of business cycles -Dynamic correlation analysis of V4 countries. Acta univ. agric. et silvic. Mendel. Brun., 2012, LX, No. 4, pp. 181-188 The purpose of our paper is to defi ne rules for decision of existence spurious synchronization of countries within the currency area. We devote this new methodological approach from an empirical research based on the variability of a dynamic correlation (correlation in frequency domain). We analyze the dynamic correlation in full range and in the business cycle frequencies as well. We also consider lags in economic activity co-movements. Contrary to the standard approach we show its insuffi ciency especially in case of time domain instruments. For this goal GDP values in quarters of the four Visegrad countries and the Eurozone in the period 1997/Q1-2011/Q1 are used. OCA theory, monetary policy effi ciency, co-movements, Hamming window The process of European integration, especially the issue of business cycle synchronization is at the forefront of economists' minds over the past twenty years. The theoretical arguments are founded in the theory of optimal currency areas (OCA theory) which was pioneered by There are several methods for measuring the synchronization of business cycles. The most common methods are the unconditional correlation between the two countries in diff erent time periods, the identifi cation of delays various phases of business cycles, volatility of cyclical fl uctuations in economic activity, stability and similarity of unexpected fl uctuations in economic activity or The most of recent empirical analysis are based on the stochastic approach with the frequency uncertainty. These analyses are based on the correlation and similar methods which do not provide any information about the causality. The intuition is that if the incidence of supply and demand shocks and the speed with which the economy adjusts -taking into consideration also the policy responses to shocks -are similar across partner countries, then the need for policy autonomy is reduced and the net benefi ts from adopting a single currency might be highe