Business Cycle Synchronization and Insurance Mechanisms in the EU

Antonio Afonso and Davide Furceri

No 2007/26, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: In this paper we provide a positive exercise on past business-cycle correlations and risk sharing in the European Union, and on the ability of insurance mechanisms and fiscal policies to smooth income fluctuations. The results suggest in particular that while some of the new Member States have well synchronized business cycles, for some of the other countries, business cycles are not yet well synchronized with the euro area’s business cycle, and risk-sharing mechanisms may not provide enough insurance against shocks.

Keywords: EU; Optimum Currency Areas; Business Cycle Synchronization; Insurance Mechanisms. (search for similar items in EconPapers)
JEL-codes: E32 E42 F41 F42 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-bec, nep-cba, nep-eec, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Business cycle synchronization and insurance mechanisms in the EU (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp262007

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