Detecting Business Cycles and Concordance of the Demand-based Classified Production of the Visegrad Countries – Regime Switching Approach
Detecting Business Cycles and Concordance of the Demand-based Classified Production of the Visegrad Countries – Regime Switching Approach

Summary/Abstract: The aim of this paper is to detect business cycles of the Visegrad countries using Markov-switching approach and to examine their synchronicity with the Euro Area aggregate as one of the inevitable conditions for optimal common monetary policy implementation. Unlike previous studies, we provide a further analysis by the use of disaggregated data in order to achieve a detailed look at the co-movement of the production and find the highest level of the synchronization within the capital and intermediate goods sector. On the contrary, non- -durable consumer goods production can be identified as a potential demandbased source of the asymmetric shocks due to the lowest rate of concordance. The results on the aggregated level complemented with the Hodrick-Prescott filtered data suggest a medium-to-high level of synchronization, although its increase in time cannot be confirmed for all Visegrad countries.

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