Synchronization without similarity. The effects of COVID-19 pandemic on GDP growth and inflation in the Eurozone

Krzysztof Beck

Applied Economics Letters, 2023, vol. 30, issue 8, 1028-1032

Abstract: As the European Central Bank implements a common monetary policy for all member states, the effectiveness of the policy hinges upon the synchronization and similarity of inflation and GDP growth between them. We examine the consequences of COVID-19 outbreak for GDP growth and inflation of the Eurozone countries. We find that business cycles have been diverging since the aftermath of the Financial Crisis; however, the outbreak of COVID-19 brought about synchronization on a record scale. However, this increase in comovement is accompanied by an increase in the dissimilarity in the rates of GDP growth. Ergo, synchronization without similarity.

Date: 2023
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DOI: 10.1080/13504851.2022.2032579

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