Investment dynamics in central and eastern Europe: a nonlinear approach

ABSTRACT

The aim of this article is to understand the dynamics of investment in Central and Eastern European Countries (CEECs). The role that investment plays in the economic development is of particular interest in these countries, as, on the one hand, they have experienced a transition to market economies and, on the other hand, they have joined the European Union. This study contributes to the related literature by resorting to nonlinear models, which give us a better and more flexible understanding of the behaviour of the dynamics of investment, in comparison to linear specifications. The aim is to analyse which economic fundamentals are behind the nonlinear behaviour, as stated by the theoretical literature, of our variable of interest. Our results evidence the importance of the macroeconomic conditions on the dynamics of investment in CEECs, particularly its own recent history and the cyclical state of the economy.

KEYWORDS:

• Investment
• global financial crisis
• central and eastern europe
• nonlinearities

Acknowledgments

The authors gratefully acknowledge comments from two anonymous referees and the editor. The usual disclaimer applies. Estefanía Mourelle wishes to thank the financial support from ECOBAS research center. Juan Carlos Cuestas acknowledges the financial support from the Generalitat Valencia project AICO/2021/005 and the Universitat Jaume I project UJI-B2022-03.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Due to the amount of data (countries and variables) involved in these calculations, results are not provided but are available upon request.

Additional information

Funding

The work was supported by the Generalitat Valenciana [AICO/2021/005]; ECOBAS [N/A]; Universitat Jaume I [UJI-B2022-03]