A Real Business Cycle Model for Panel Data : An Application for the Central European Transition Economies

This paper has two objectives a real business cycle model is analyzed for panel data over a short time period and the Central European transition experience is explained by RBC theory. In particular, the catch-up process of transition economies to the Western European level of development is described. The main contribution of the paper is a rigorous proof that transition data is consistent both with the standard stylized facts about macroeconomic fluctuations and with predictions from the proposed real business cycle model