Linkages between the Eurozone and the South-Eastern European Countries: A VECMX* Analysis
Macroeconomic Analysis and International Finance
ISBN: 978-1-78350-755-9, eISBN: 978-1-78350-756-6
Publication date: 26 April 2014
Abstract
Purpose
In the present paper we assess the impact of the Eurozone’s economic policies on specific South-Eastern European countries, namely Bulgaria, Croatia, Cyprus, Greece, Romania, Slovenia, and Turkey.
Design/methodology/approach
Since the countries under investigation are connected to the European Union (EU) or the Eurozone and the economic interdependence among them is evolving, we carried out our analysis using the VECMX* framework.
Findings
Our results indicate that the transition economies in our sample react in a similar manner to changes in international macroeconomic policies. Cyprus and Greece react also in a similar way, but these responses are very small in magnitude. Finally, Turkey behaves in a different way, probably due to the inflationary pressures in its economy. In general, there is evidence of linkages and interdependence among the EU or Eurozone members of the region.
Research limitations/implications
We did not construct a full structural model proposed by economic theory, but instead we estimated a reduced-form model. Data limitation is one reason. The other reason is that our sample countries are extremely heterogeneous. Also, for most of the sample countries there is an acute problem of structural uncertainty of their economies yet.
Practical implications
The way that the economies under investigation react to changes in international macroeconomic policies, may influence the Eurozone policy makers regarding the implemented monetary policy.
Originality/value
To our knowledge, the above methodology is implemented for the first time in the sample countries and provides a detailed investigation regarding their economic policies and the effects of the Eurozone policies.
Keywords
Citation
Koukouritakis, M., Papadopoulos, A.P. and Yannopoulos, A. (2014), "Linkages between the Eurozone and the South-Eastern European Countries: A VECMX* Analysis", Macroeconomic Analysis and International Finance (International Symposia in Economic Theory and Econometrics, Vol. 23), Emerald Group Publishing Limited, Leeds, pp. 185-216. https://doi.org/10.1108/S1571-038620140000023007
Publisher
:Emerald Group Publishing Limited
Copyright © 2014 Emerald Group Publishing Limited