Coherence of the business cycles of prospective members of the euro area and the euro area business cycle

Jakob de Haan, Jan Jacobs and Renske Zijm

Economic Systems, 2024, vol. 48, issue 4

Abstract: Is it beneficial for Central and Eastern European EU Member States to join the euro area? To answer that question, the coherence of the business cycles of six EU Member States and the euro area is analyzed. These countries recently joined (Croatia) or are supposed to join the euro area in the (near) future. The analysis utilizes the synchronicity and similarity measures proposed by Mink et al. (2012). Whereas the synchronicity measure captures whether output gaps have the same sign, the similarity measure identifies differences in cycle amplitudes. It is observed that the business cycles of several countries, notably Romania and Hungary, are out of sync with that of the euro area. The output gap similarity and synchronicity measures for Croatia are also fairly low. However, this also holds for some countries in the euro area.

Keywords: Business cycle coherence; Synchronization; Output gaps; Euro area enlargement (search for similar items in EconPapers)
JEL-codes: E32 F02 F42 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:48:y:2024:i:4:s0939362524000438

DOI: 10.1016/j.ecosys.2024.101221

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