Business cycles in Bulgaria and the Baltic countries: an RBC approach. (18th November 2009)

• Record Type: Journal Article
• Authors: Vasilev, Aleksandar Zdravkov
• Is Part Of: International journal of computational economics and econometrics. Volume 1:Number 2(2009)
• Page Start: 148
• Page End: 170
• Publication Date: 2009-11-18
• Subjects: business cycles -- productivity -- Baltic countries -- Bulgaria -- Estonia -- Latvia -- Lithuania -- output fluctuations -- real business cycle -- RBC -- banking reforms -- economic performance -- banking regulations -- economic policy; Econometrics -- Periodicals; Economics -- Data processing -- Periodicals; 330.01519505
• Languages: English
• ISSNs: 1757-1170

Abstract

This paper explores the business cycle in Bulgaria and the Baltic countries: Estonia, Latvia and Lithuania during the 1993-2005 period. The paper aims at deepening the understanding of the nature of output fluctuations. The neoclassical approach will be employed, much in the spirit of the real business cycle (RBC) literature, which gives a general equilibrium picture of the transition process. The model used in this paper follows the methodology of King et al. (1988). Both the model and data series show that the major drop in output was due to productivity. In addition, the timing of the banking reforms coincides with the improvement of economic performance. This is a strong indication that banking regulations in place were crucial for the output performance throughout the period in Bulgaria and the Baltic countries, a finding that has important implications for economic policy.