THE IMPACT OF SOME ECONOMIC AND MONETARY VARIABLES ON THE REAL GDP IN CEE-5 COUNTRIES

Considering the necessity of a sustainable development and the effects of recent economic crisis, the study of the determinants of the real economic growth is necessary in designing the most suitable macroeconomic policies. The aim of this paper is to study the impact of some economic and monetary variables on real GDP in several Central and Eastern European countries known as CEE-5 (Romania, Bulgaria, Poland, Hungary and Czech Republic). All the CEE-5 countries applied structural changes in the regime of the monetary policy in order to control the inflation rate or the exchange rate. The influence of the monetary authority increased because of these structural changes and because of the struggle to ensure the high transparency of the measures. Poland is the only country which has not suffered any consequences of the economic crisis. The novelty of the research is brought by the use of a Bayesian approach to identify the variables with significant impact on GDP. The methods are represented by the Bayesian ridge regression models used to identify the relevant variables affecting GDP and a panel vector-autoregressive model (panel VAR) used to capture the effect in time. The results indicated that inflation rate had a negative impact on real GDP in all countries excepting Poland, while real interest rate had a significant effect on real GDP in all CEE-5 countries. In conclusion, the maintenance of the real interest rate to a low level is indicated for all these CEE countries in order to achieve a sustainable economic growth.