Macroeconomic Determinants of Political Stability in Selected Transition Economies

The relationship between political stability and macroeconomic determinants is a frequently discussed topic in economic theory in recent years. In this study, the relation between political stability and macroeconomic determinants for 10 transition economies of Central and East Europe (CEE), namely Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Romania and Bulgaria, which are members of European Union, was investigated by panel data analysis method based on annual data of 2002-2017 period. In the empirical analyzes, political stability was used as a dependent variable and gross domestic product per capita, commercial opening rate, consumer price index and unemployment rate were used as independent variables, and in order to show the dates of membership to the union dummy variable was utilized. The results of empirical analysis according to the panel vector autoregression model, there is causality from trade openness ratio to consumer prices index, and according to the panel error correction model there is a long term causality from the puppet variable that shows the European Union membership, from the gross national product per capita, from unemployment rate, from trade openness ratio and consumer prices index to political stability as a whole.

Keywords

European Union, Political Stability, Transition Economies, Panel Data