Business cycle synchronisation in EMU: Can fiscal policy bring member-countries closer?

Stavros Degiannakis, David Duffy, George Filis and Alexandra Livada

Economic Modelling, 2016, vol. 52, issue PB, 551-563

Abstract: The present study adds to the literature on the impact of fiscal policy on business cycle synchronisation. Specifically, it investigates the effects of fiscal policy on business cycle synchronisation between 10EMU member-countries and the aggregate EMU12-wide business cycle, using a time-varying framework. The findings suggest that fiscal policy has important effects on business cycle synchronisation for all 10EMU countries. Hence, fiscal policy is shown to have the potential to be supportive of macroeconomic stabilisation in the Eurozone. However, the evidence reveals that none of the countries under examination consistently uses fiscal policy to promote business cycle synchronisation.

Keywords: Time-varying correlation; EMU business cycle; Business cycle synchronisation; Fiscal policy; Diag-BEKK model (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (15)

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Working Paper: Business Cycle Synchronisation in EMU: Can Fiscal Policy Bring Member-Countries Closer? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:52:y:2016:i:pb:p:551-563

DOI: 10.1016/j.econmod.2015.09.035

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