Interest premium and economic growth: the case of CEE

Daniel Baksa () and István Kónya
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Daniel Baksa: Institute of Economics, Research Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Central European University

No 1712, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: This paper views the growth and convergence process of the four Visegrad economies - the Czech Republic, Hungary, Poland and Slovakia - through the lens of the open economy, stochastic neoclassical growth model. We use a unified framework to understand both the long-run convergence path and fluctuations around it. Our empirical exercise highlights both the role of initial conditions such as indebtedness and capital intensity, and random shocks in the growth process. In particular, we explore the importance of the external interest rate premium, and its role in driving investment and the trade balance.

Keywords: stochastic growth; technology shocks; interest premium; small open economy; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: E13 O11 O41 O47 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2017-04
New Economics Papers: this item is included in nep-eec, nep-gro, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Interest premium and economic growth: the case of CEE (2017)
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