The two-speed Europe in business cycle synchronization

Maximo Camacho, Angela Caro () and German Lopez-Buenache
Additional contact information
Angela Caro: Universidad Carlos III de Madrid

Empirical Economics, 2020, vol. 59, issue 3, No 1, 1069-1084

Abstract: Abstract This paper evaluates the consequences of the financial and sovereign debt crises on the evolution of the business cycle synchronization across all the Euro Area members. We take advantage of the dimension reduction properties of dynamic factor models to summarize a large dataset of macroeconomic indicators for the Euro Area countries. Then, we estimate latent state variables based on Markov-switching methodologies to obtain a time-varying measure of business cycle synchronization. The combination of these two techniques allows us to describe the evolution in the degree of coincidence of the business cycle phases along time for this set of countries. Our results suggest that there was a general decline in the degree of business cycle synchronization across the Euro Area countries following the financial and the sovereign debt crises. Although they have recovered the levels of business cycle synchronization exhibited before these events, there are significant differences across countries in the required time to recover those levels.

Keywords: Business cycle synchronization; Monetary union; Financial crisis; Sovereign debt crisis (search for similar items in EconPapers)
JEL-codes: C55 E32 F44 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s00181-019-01730-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:empeco:v:59:y:2020:i:3:d:10.1007_s00181-019-01730-4

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-019-01730-4

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().