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

Jesús Crespo-Cuaresma and Octavio Fernández-Amador
Authors registered in the RePEc Author Service: Jesus Crespo Cuaresma

Journal of International Money and Finance, 2013, vol. 37, issue C, 239-259

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 comovement 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 comovements in business cycles.

Keywords: Business cycle synchronization; Structural VAR; Structural shocks; European Monetary Union (search for similar items in EconPapers)
JEL-codes: E32 E63 F02 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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Working Paper: Business cycle convergence in EMU: A second look at the second moment (2010)
Working Paper: Business cycle convergence in EMU: A second look at the second moment (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:37:y:2013:i:c:p:239-259

DOI: 10.1016/j.jimonfin.2013.06.002

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