Impact of the Global Financial Crisis on the Business Cycle in the Visegrad Group

Abstract

Objective: The aim of the research was to analyse morphological changes in the Visegrad Group business cycles before and after the global financial crisis of 2007/2008, and to provide comparison of their overall economic performance in terms of the real GDP growth, unemployment rate changes and price stability. Research Design & Methods: Visegrad Group’s business cycles were determined by employing Hodrick and Prescott filter to extract cyclical fluctuations, while Bry and Boschan algorithm was applied to identify the turning points of the cycles. Morphological features of business cycles were examined. The analysis was supplemented by examining unemployment rate and price stability. Findings: The financial crisis resulted in the drop of the GDP growth and a periodical increase in unemployment. Nevertheless, in the 20 analysed years the unemployment rate tends to attain lower values, while prices become more stable. The last two economic cycles resulted in post-crisis rebound of the GDP growth. At the same time, the performance of the countries (except for outperforming Poland) becomes more and more correlated. Implications & Recommendations: The Visegrad Group was affected by the crisis and it is plausible that any future disturbances in the world economy might affect it again. Further research aiming at deeper understanding of how a particular country was affected could help mitigate a negative impact of future crises. Contribution & Value Added: The article helps to understand how the crisis affected the V4 economies in terms of the real GDP growth, unemployment rate and price stability. It indicates how the economic aggregates behaved before and after the crash.