Geopolitical and Geo-Economic Integration and International Adjustment of Economic Cycles: An Extended Conceptual SVECM Model for Ukraine and the European Union
Orudzhev E. G., Alizade A. R.

Orudzhev, Elshar Gurban., and Alizade, Arzu Rafik. (2026) “Geopolitical and Geo-Economic Integration and International Adjustment of Economic Cycles: An Extended Conceptual SVECM Model for Ukraine and the European Union.” The Problems of Economy 2:39–47.
https://doi.org/10.32983/2222-0712-2026-2-39-47

Section: World economy and international relations

UDC 519.8

Abstract:
The relevance of this study stems from increasing international interdependence, the transmission of geopolitical and financial shocks, and the need to analyze the multi-level macroeconomic synchronization between Ukraine and the European Union against the backdrop of the ongoing war, an energy crisis and the structural transformation of the global economy. The aim of this article is to develop an extended conceptual spectral SVECM model. The main hypotheses of the study concern the existence of long-term cointegration between Ukraine and the EU, the strengthening of international synchronization under the influence of geo-economic integration, the multidimensional nature of international adjustment, and frequency-dependent causality. The research questions relate to the analysis of the mechanisms of international adjustment, spectral synchronization, phase adaptation and the oscillatory dynamics of international economic cycles. The research methodology is based on a combination of structural vector error correction models (SVECM), spectral analysis, Fourier approaches, Breitung–Candelon causality, Johansen cointegration analysis, and Fourier-KPSS and Fourier-ADL tests. The model utilizes indicators of trade, financial, institutional, energy and geopolitical integration, combined into a geo-economic integration index. The results of the study show that international integration is a multi-scale process, and that cointegration can be interpreted as a mechanism for international macroeconomic adjustment and phase synchronization of linked macroeconomic oscillators. The scientific novelty of the article lies in the development of a conceptual spectral SVECM model explaining structural cointegration, spectral synchronization, oscillatory correction and frequency-dependent integration. The practical value of this research lies in the model’s potential for forecasting international economic cycles, analyzing the stability of macroeconomic trends, and developing economic policy instruments for Ukraine and the EU.

Keywords: geo-economic integration; SVECM; spectral synchronization; Breitung–Candelon causality; business cycles; asymmetric causality.

Formulae: 4. Bibl.: 29.

Orudzhev Elshar Gurban – Doctor of Sciences (Physics and Mathematics), Professor, Head of the Department, Department of Mathematical Economics, Baku State University (23 Academician Zahida Khalilova Str., Baku, Azerbaijan)
Alizade Arzu Rafik – Candidate of Sciences (Economics), Lecturer, Department of Mathematical Economics, Baku State University (23 Academician Zahida Khalilova Str., Baku, Azerbaijan)
Email: arzu.alizade.98@gmail.com

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