Business cycle synchronicity, amplitude and the euro: one size does not yet fit all

Sébastien Wälti
Authors registered in the RePEc Author Service: Sébastien Waelti

MPRA Paper from University Library of Munich, Germany

Abstract: This paper focuses on the impact of the euro on the degree of business cycle synchronisation between nineteen advanced economies over the period 1980-2008. In contrast with the existing evidence based on correlation coefficients, we assess the impact of the euro on the synchronicity and the relative amplitude of business cycles separately. We find that although the introduction of the euro has raised the likelihood of business cycle synchronicity, it has not affected the relative amplitude of business cycles. Hence, the common monetary policy has become increasingly suitable for members in terms of the needed direction of policy moves, but not in terms of the required magnitude of these moves.

Keywords: euro; monetary union; business cycle; synchronisation; probit (search for similar items in EconPapers)
JEL-codes: E32 F15 F36 F41 (search for similar items in EconPapers)
Date: 2009-08
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