ARE BUSINESS CYCLES ALL ALIKE IN EUROPE?

Márcio Antônio Salvato, João Issler and Angelo Mont'alverne Duarte

Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] from ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics]

Abstract: We investigate whether business cycles are all alike computing the welfare costs of business cycles for European-Union (EU) as the solution of the problem proposed by Lucas (1987). Because these countries have a long tradition of integration and trade, it is a "natural experiment" to investigate how similar their welfare costs of business cycles are. Using standard assumptions on preferences and a reasonable reduced form for consumption, we computed welfare costs using three alternative trend-cycle decomposition methods, but focusing on the multivariate Beveridge-Nelson decomposition. Our results show that welfare costs are very different across EU countries and between US and EU countries, and thus it is a strong evidence that business cycles are not alike in Europe.

JEL-codes: C32 C53 E32 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-eec and nep-mac
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Citations: View citations in EconPapers (6)

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