Comparing business cycles in the Eurozone and in Poland: a Bayesian DSGE approach

Andrzej Cieślik and Jan Teresiński

Bank i Kredyt, 2020, vol. 51, issue 4, 317-366

Abstract: In this article we compare business cycles in the Eurozone and in Poland using a DSGE approach. We estimate the Smets and Wouters (2007) model using Bayesian methods and analyze impulse response functions of model variables, as well as their variance decomposition. Although we do not find significant differences in structural parameters’ estimates, it turns out that persistence and volatility of shocks differ among two economies. Impulse response functions are comparable and output fluctuations are driven by similar demand shocks, but we observe a significant effect of the exogenous spending shock in the Eurozone and the price markup shock in Poland. Our analysis also shows that the euro adoption in Poland is currently not recommended, unless relevant changes in macroeconomic and labour market policies are implemented.

Keywords: Bayesian estimation; business cycles; DSGE model; Eurozone; Poland (search for similar items in EconPapers)
JEL-codes: E32 E37 E63 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpbik:v:51:y:2020:i:4:p:317-366

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