Prague Economic Papers 2013, 22(4):504-523 | DOI: 10.18267/j.pep.465

The Economic Balance of the Czech Republic and Slovakia During the Economic Crisis

Ilya Bolotov, Radek Čajka, Kateřina Gajdušková
University of Economics, Prague, W. Churchill Sq. 4, CZ - 130 67 Prague 3 (ilya.bolotov@vse.cz, radek.cajka@vse.cz, katerinagajduskova@gmail.com).

The paper examines development of economic balance and efficiency of monetary and fiscal policy in the Czech Republic and Slovakia during the crisis with the help of empirical verification of Robert Mundell's model of effective market classification. Our main findings show that although there was no direct 'loser' during the crisis, the Czech Republic seemed to have better coped with its economic imbalances due to the independence of its monetary policy. Slovakia, on the contrary, has preserved several problems on the side of external balance. However, as both countries show certain differences, it is impossible to assess whether the euro adoption had the same effect on both of them. In general, the paper contributes to the research on the Czech and Slovak economy and euro area membership.

Keywords: external balance, cointegration analysis, internal balance, economic crisis, effective market classification model, error correction model
JEL classification: C22, E30, E63, F41

Published: January 1, 2013  Show citation

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Bolotov, I., Čajka, R., & Gajdušková, K. (2013). The Economic Balance of the Czech Republic and Slovakia During the Economic Crisis. Prague Economic Papers22(4), 504-523. doi: 10.18267/j.pep.465
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