Journal of Economics - Obsahy ročníkov

After the start of recovery (in 2010) from previous recession, the develop-ment of the Slovak economy in 2011 became more volatile. In the first half of 2011 the positive tendencies continued and the economic development was more favorable than expected, in the second half of 2011 renewed concerns about a new recession emerged. In 2011, some significant changes in development tendencies occurred: the price level growth revived, the public finance balance improved and the employment growth was observed after a longer period. The impacts of debt crisis and the pes-simism connected with it were at the time not as negative as expected earlier. Therefore, we are not seeing the recession as the most likely development scenario up to 2013. We are expecting that the economic development in the upcoming years will be accompanied by relatively weak economic growth, with some signs of instability. For the policy makers it will be important, in addition to the stabilization and public finance consolidation, to restore the confidence of economic agents in the economy. Keywords: economic growth, economic policy, post recession development, country study – Slovakia, forecast, production, balance of payments, external trade, labour market, public finance, monetary policy JEL Classification: D11, E23, E37, E52, E62, F14, F32, J20, L60, O10, O52

The paper examines the unconditional sigma and time-series convergence of real GDP per capita (measured in national currencies and euros) for CEE8 countries during the 1995 : Q1 – 2011 : Q1 period by applying the unit root fra-mework using the DF-GLS test and the Lee and Strazicich (2003; 2004) test, which allows for endogenous breaks in trends and constants. We selected Germany as a benchmark country for relative real GDP per capita because of its geographical and economical position relative to all CEE8 countries. We have found that both sigma convergence and time-series convergence were present for most of the CEE8 countries prior to the breaks in trends, but after the breaks, the convergence slowed or reversed and thus indicated divergence. Keywords: time-series convergence, sigma convergence, CEE, unit root test, structural breaks JEL Classification: C22, G01, E0, O40, P20