Germany and the European Business Cycle - An Analysis of Causal Relations in an International Real Business Cycle Model

Ferdinand Fichtner

No 01/2003, IWP Discussion Paper Series from Institute for Economic Policy, Cologne, Germany

Abstract: This paper studies the role of the German economy for the existence of the so called European business cycle, a term referring to the regularly observed synchronization of the national business cycles in Europe. Using a three-country general equilibrium model, we are able to simulate impulse response functions mimicking the important features observed in the data. Focusing on the importance of shocks affecting the German GDP we show that trade-related transmission from Germany to the other European economies is only of minor importance for the synchronization of national business cycles. On the contrary, our findings suggest that the influence of common shocks and of technology spillovers accounts for most of the parallels in economic performance.

Keywords: European business cycle; Transmission; Open economy macroeconomics; Real business cycles (search for similar items in EconPapers)
JEL-codes: E32 F41 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2003-05
New Economics Papers: this item is included in nep-dge, nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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