Business cycle coherence and OCA endogeneity testing during the integration period in the European Union

Nikola Najman and Petr Rozmahel
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Nikola Najman: Research Centre, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic
Petr Rozmahel: Research Centre, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2013, vol. 61, issue 4, 1033-1040

Abstract: The paper deals with assessing the EU from the new optimum currency area theory perspective. It focuses on measuring of the business cycle coherence applying the composite indicators of output gap similarity and synchronicity. Static as well as dynamic business cycle analysis is applied in the paper. In addition, the OCA endogeneity hypothesis is tested based on results of the business cycle coherence analysis. The results show high general coherence of the business cycles across the EU countries in terms of synchronicity measures. Detailed analysis of the output gap similarity indicates differences in the scale of cyclical deviations and impact of shocks in individual countries in the EU. Also the ability to cope with the crisis as a kind of external shock differs in the EU countries. The results do not provide a clear evidence of the OCA endogeneity hypothesis related to the Euro area member and non-member countries.

Keywords: business cycle coherence; Euro area; global financial crisis; optimum currency area theory (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mup:actaun:actaun_2013061041033

DOI: 10.11118/actaun201361041033

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