Jan Brůha, Oxana Babecká Kucharčuková
In this paper, we analyse macroeconomic developments in European economies since the Great Recession. We present evidence that macroeconomic developments in the EU countries can be classified into latent classes. Countries in a given class exhibit a similar pattern of economic and labour market developments during and after the crisis. We then present evidence that the latent classes of countries differ in terms of quality of institutions and regulation. Based on this, we conclude that quality of institutions and regulation are crucial for the resilience of countries to shocks. The most important country characteristics associated with a quick recovery after the initial shock are low protection of temporary contracts, political stability, regulatory quality and pre-crisis fiscal space. On the other hand, other types of employment protection and generosity of unemployment benefits seem to not influence resilience.
JEL codes: C14, E02, E65
Keywords: Great Recession, institutions, regulation, resilience
Issued: December 2017
Download: CNB WP No. 10/2017 (pdf, 997 kB)