Commonalities and heterogeneity in the Iberian business cycle

Antonio Afonso and Hugo Morão

The Journal of Economic Asymmetries, 2024, vol. 30, issue C

Abstract: This paper studies the characteristics of Spanish and Portuguese business cycles over around 150 years. We estimate a time-varying multi-country Bayesian Vector Autoregression, jointly modeling real and financial variables for Portugal and Spain to investigate convergence and synchronization. The primary evidence indicates a consistent common component linking the business cycles of the two nations. Fiscal policy harmonization and financial market integration have been successful, as seen in the converging trends of stock prices and budget deficits. However, this does not extend to credit and country spreads, where idiosyncratic dynamics continue to be significant and are unlikely to diminish in the near future, which can pose challenges in implementing further policies like the Euro.

Keywords: Portugal; Spain; Heterogeneity; Business cycle; Euro area; Panel BVAR (search for similar items in EconPapers)
JEL-codes: C32 E32 F15 F45 N13 N14 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1703494924000240
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:joecas:v:30:y:2024:i:c:s1703494924000240

DOI: 10.1016/j.jeca.2024.e00375

Access Statistics for this article

The Journal of Economic Asymmetries is currently edited by A.G. Malliaris

More articles in The Journal of Economic Asymmetries from Elsevier
Bibliographic data for series maintained by Catherine Liu ().