Jakub Gazda

Poznan University of Economics

j.gazda@ue.poznan.pl

UNOBSERVED VARIABLES AS INDICATORS OF RECESSION IN POLAND AND UKRAINE

Bartosz Godziszewski

Poznan University of Technology

bartosz.godziszewski@put.poznan.pl

ABSTRACT. The main aim of the paper is to present crisis trends in business cycles for Polish and Ukrainian economies at the turn of the XX and XXI century using unobserved variables method. The aim of the research is to analyze empirical tests for deviations from trend estimated using Hodrick Prescott (HP) filter. The results achieved can be interpreted both – as GDP (gross domestic product) gap and, when RBC attitude is applied, as cyclical component of time series. Moreover, authors made an attempt to find relationships between simple observations of economy and changes of unobserved variable. Research for Polish and Ukrainian Economies was conducted for the period from I Q 1995 to III Q 2010.

Problem of going through economic slowdown is very important due to the fact that neither economics theory nor policy propose effective solution for stable sustainable development. The article provides some general conclusions stemming from analysis of Polish and Ukrainian economies on the centuries breakthrough, it can be also treated as guidepost useful in the modeling and deep explaining of recession trends.

Received: May, 2011

1st Revision: June, 2011

Accepted: July, 2011

JEL Classification: E13, E17, E32

Keywords: potential output estimation, output gap, Hodrick Prescott filter, real business cycle theory.