The emergence of a European region: business cycles in South-East Europe from political independence to World War II

Abstract

Relying on dynamic factor business cycle indices for five SouthEast European countries (Austria(-Hungary), Bulgaria, Greece, Romania, Serbia/Yugoslavia), we document steadily increasing synchronisation as part of a pan-European business cycle before 1913 and the emergence of a regional business cycle (including and radiating from Germany) in the interwar period. These dynamics were largely driven by trade, involving initially England, France and Germany but increasingly centred on Germany. Our results also show that the Balkan countries travelled a long way from an economic backwater of Europe in the 1870s to a much more integrated part of the European economy six decades later.

Has Eastern Europe Always Lagged Behind the West? Historical Evidence from Pre‐1870

“…But there are very few studies allowing us to make such a claim. One of the few studies investigating trade integration (as a driving force behind business cycle synchronization, which is the main focus of the article) for the small SEE countries is Morys and Ivanov (2015). Their story is more conventional in that they document exceptionally low but then steadily rising levels of trade integration (and business cycle synchronization) for Bulgaria, Greece, Romania and Serbia/Yugoslavia between 1875 and World War II.…”

“…In sum, while the demographic research of recent years has tended to undermine Hajnal (1965)'s assertion of a reasonably homogeneous (West) European marriage pattern, it has vindicated Hajnal's research findings on Eastern Europe and arguably strengthened them. Pan-European studies such as Dennison and Ogilvie (2014) are complemented by country-specific or regional research for Eastern Europe, surveyed in Cvrcek (2020), which on balance delivers the same message: demographic patterns and family systems in Western and Eastern Europe remained different at least until the demographic transition, which in most parts of CESEE only happened in the first half of the 20th century (Morys and Ivanov, 2020). Researching the full implications of such differences will be key in better understanding the West-East divide in future.…”

Cliometric Approaches to Central, East, and South-East Europe

“…Late state foundation and weak bureaucracies imply poor historical records and statistical material. Balkan economic history is a good case in point, where our understanding of economic history after political independence in the nineteenth century is far greater than for the period before (Lampe and Jackson 1982;Palairet 1997;Morys and Ivanov 2015). Moreover, who "owns" the economic history of a particular stretch of land in Eastern Europe when borders changed and settlement patterns were mixed?…”

“…But there are very few studies allowing us to make such a claim. One of the few studies investigating trade integration (as a driving force behind business cycle synchronization, which is the main focus of the article) for the small SEE countries is Morys and Ivanov (2015). Their story is more conventional in that they document exceptionally low but then steadily rising levels of trade integration (and business cycle synchronization) for Bulgaria, Greece, Romania, and Serbia/Yugoslavia between 1875 and World War II.…”

Are Euro-Area expectations about recession phases effective to anticipate consequences of economic crises?

“…Then, we are able to discuss whether this characterization coincides with the empirical evidence about the recession phases observed for these economies. To this end, we take advantage of the literature on synchronization of Euro-Area business cycles (Mundell 1961;Alesina and Barro 2002;Fidrmuc and Korhonen 2006;Bencik 2011;Morys and Ivanov 2015). In particular, we use expectation surveys and Markov Switching models to show that data alerted from heterogeneous consequences coming from a future crisis.…”