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Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/14783

Title: Business Cycle Synchronisation With(in) the Euro Area: In Search of a 'Euro Effect'
Authors: Weyerstrass, Klaus
Van Aarle, Bas
Kappler, Marcus
Seymen, Atilim
Issue Date: 2011
Citation: Open Economies Review, 22 (3), p. 427-446
Abstract: This paper studies business cycle synchronisation and convergence in the euro area. A set of stylised facts concerning the characteristics of the business cycle and synchronisation in the euro area is derived. It is analysed whether convergence or divergence patterns between the euro area countries changed after the introduction of the euro. In addition, a closer look is taken at the degree of business cycle synchronisation between other, i.e. non-euro area countries and the euro area average. Furthermore, a dynamic correlation analysis is carried out to broaden the scope of business cycle synchronisation further. We enrich the study with a frequency domain analysis and use the concepts of coherence, dynamic correlation and phase. Our main results are (i) that the synchronisation of business cycles in the euro area is fairly high, and (ii) that the introduction of the euro in 1999 does not seem to have generated a very strong--neither positive nor negative--impact on synchronisation. Coherence and dynamic correlation among the euro area countries, the UK, Japan and the US are also fairly high, reminding of the importance of synchronisation with the global business cycle.
URI: http://hdl.handle.net/1942/14783
DOI: 10.1007/s11079-009-9131-y
ISSN: 0923-7992
Category: A1
Type: Journal Contribution
Appears in Collections: Research publications

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