Business cycle synchronisation between the V4 countries and the euro area

Business cycle synchronisation between the V4 countries and the euro area is important in regard to the costs of the common monetary policy. This paper addresses the issue of business cycle synchronisation by directly calculating cross correlations, by calculating cross correlations from primary impulses, and finally by calculating output gap component correlations from common and country-specific shocks. In regard to the output gap, the results of all three methods are approximately the same: before 2001, the business cycles of the V4 countries were not synchronised with the euro area (low or negative correlations); between 2001 and 2007, the correlations entered positive territory as the V4 countries joined the EU and trade between the V4 countries and the euro area increased; and during the economic crisis of 2008–2009, synchronisation increased still further.optimum currency area, business cycle, autoregressive model, SVAR

Revision of an Econometric Model for Slovakia

In the first part the original version of a demand-oriented model of a country in transition is briefly presented. It consists of a demand block, an income block and a monetary block. The second part is concerned about the innovations, made in this version. Most important is the attempt to reflect the structural change by means of a generalized production function in intensive form. After characterizing the model, the author turns to policy evaluation. The model implies that investment crowds out labor quite strongly. Thus, the use of government transfers for labor beside transfers for investment is considered and some equations are modified. A "direct" and a grid search for optimal policy are presented. Finally, the results for practical decision making are summarized, finding transfers for labor efficient in fighting unemployment and ensuring output growth.Econometric Model, Labor Productivity, Fiscal Policy

The Effects of euro Adoption on the Slovak Economy

In this study we assess the effects of euro adoption from an economic perspective. The benefits and disadvantages of Slovak entry to the euro area were discussed already when the euro adoption strategy was adopted. This analysis utilizes the latest information, using the set euro adoption date and the chosen euro adoption scenario. We attempt to quantify the most important effects, so that the costs and benefits can be compared. The costs and risks related to the euro area entry will depend on economic conditions and policies. Therefore we analyze the economic policies, which should support euro adoption, the issues of optimal timing of euro area entry and the impacts of euro adoption on citizens, businesses and the state administration.

Revision of an Econometric Model for Slovakia

Abstract: In the first part the original version of a demand-oriented model of a country in transition is briefly presented. It consists of a demand block, an income block and a monetary block. The second part is concerned about the innovations, made in this version. Most important is the attempt to reflect the structural change by means of a generalized production function in intensive form. After characterizing the model, the author turns to policy evaluation. The model implies that investment crowds out labor quite strongly. Thus, the use of government transfers for labor beside transfers for investment is considered and some equations are modified. A "direct" and a grid search for optimal policy are presented. Finally, the results for practical decision making are summarized, finding transfers for labor efficient in fighting unemployment and ensuring output growth.