Business Cycle Synchronisation in EMU: Can Fiscal Policy Bring Member-Countries Closer?

Stavros Degiannakis, David Duffy, George Filis and Alexandra Livada

MPRA Paper from University Library of Munich, Germany

Abstract: The paper investigates the effects of fiscal policy on the time-varying business cycle synchronisation between the EMU12 member-countries and the aggregate EMU12-wide business cycle. The impact of fiscal policy on the level of synchronisation is estimated from the difference between the time-varying correlation of each country's business cycle and the aggregate EMU12 business cycle, before and after the effects of fiscal policy on the business cycle are accounted for. The findings suggest that fiscal policy has important effects on business cycle synchronisation for all EMU12 countries. Hence, fiscal policy is shown to have the potential to be supportive of macroeconomic stabilisation in the Eurozone. However the evidence reveals that none of the countries under examination consistently use fiscal policy to promote business cycle synchronisation.

Keywords: Time varying correlation; EMU business cycle; business cycle synchronisation; fiscal policy; Diag-BEKK model. (search for similar items in EconPapers)
JEL-codes: C32 E32 E62 O52 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/67892/1/MPRA_paper_67892.pdf original version (application/pdf)

Related works:
Journal Article: Business cycle synchronisation in EMU: Can fiscal policy bring member-countries closer? (2016)
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:pra:mprapa:67892

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().