Business cycle convergence in EMU: A second look at the second moment

Crespo Cuaresma J & Fernandez-Amador O (2013). Business cycle convergence in EMU: A second look at the second moment. Journal of International Money and Finance 37: 239-259. DOI:10.1016/j.jimonfin.2013.06.002.

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Abstract

We analyse the dynamics of the standard deviation of demand and supply shocks as well as of the demand component of GDP across countries in the European Monetary Union (EMU). This analysis allows us to evaluate the patterns of cyclical co-movement in EMU and compare them to the cyclical performance of the new members of the European Union (EU) and other OECD countries. We make use of sigma-convergence methods to identify synchronization patterns in business cycles. The Eurozone has converged to a stable lower level of dispersion across business cycles during the end of the 80s and the beginning of the 90s. The new EU members are relatively well synchronized with the EMU, and an enlargement of the EMU to 22 members would not significantly decrease its optimality as a currency area. There is evidence for some Europe-specific characteristics as compared to global co-movements in business cycles.

Item Type: Article
Uncontrolled Keywords: Business cycle synchronization; Structural VAR; Structural shocks; European Monetary Union
Research Programs: World Population (POP)
Bibliographic Reference: Journal of International Money and Finance; 37:239-259 (October 2013)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:48
Last Modified: 13 Sep 2016 14:11
URI: http://pure.iiasa.ac.at/10380

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