An integrated Bayesian-principal component approach to macroeconomic resilience: The case of the central Europe and baltic macro-region

We propose a new approach to study the resilience to the business cycle fluctuations. of the Central Europe and Baltic (CEB) macro-region. By individually estimating six open economy DSGE models within the macro-region, we identify the business-cycle-volatility drivers for each country. Then, we use the outcome of our six estimates to conduct a principal component analysis to determine structural common characteristics required to explain economic resilience in the CEB macro-region.