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Convergence between the business cycles of Central and Eastern European countries and the Euro area

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  • Nenad Stanisic

    ()
    (University of Kragujevac, Faculty of Economics)

Abstract

Although entry to the Euro area (EA) is based only on fulfilment of the Maastricht criteria, implementation of optimum currency criteria and real economic convergence determines the benefits and costs of monetary integration. This paper focuses on the synchronization of business cycles among Central and Eastern European countries (CEECs) and the EA. Business cycles are extracted from GDP data series using a double Hodrick–Prescott filter method. The degree of co-movement of cycles is evaluated on the basis of various methods of rolling correlation. Results show that there is no common CEE business cycle, although a synchronization trend is evident. Similarly, there is a strong trend of convergence of CEEC national business cycles toward that of the EA.

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Bibliographic Info

Article provided by Baltic International Centre for Economic Policy Studies in its journal Baltic Journal of Economics.

Volume (Year): 13 (2013)
Issue (Month): 1 (July)
Pages: 63-74

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Handle: RePEc:bic:journl:v:13:y:2013:i:1:p:63-74

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Related research

Keywords: Business cycles; Central and Eastern European countries; Monetary integration; Euro area;

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  1. Fidrmuc, Jarko & Korhonen, Iikka, 2006. "Meta-analysis of the business cycle correlation between the euro area and the CEECs," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 518-537, September.
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  7. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(449), pages 1009-25, July.
  8. Wälti, Sébastien, 2009. "The myth of decoupling," MPRA Paper 20870, University Library of Munich, Germany.
  9. Traistaru, Iulia, 2004. "Transmission channels of business cycles synchronization in an enlarged EMU," ZEI Working Papers B 18-2004, ZEI - Center for European Integration Studies, University of Bonn.
  10. Weimann, Marco, 2003. "OCA theory and EMU Eastern enlargement: An empirical application," Research Notes 8, Deutsche Bank Research.
  11. Michael Massmann & James Mitchell, 2004. "Reconsidering the Evidence: Are Euro Area Business Cycles Converging?," Journal of Business Cycle Measurement and Analysis, OECD Publishing,CIRET, vol. 2004(3), pages 275-307.
  12. Wälti, Sébastien, 2011. "Stock market synchronization and monetary integration," Journal of International Money and Finance, Elsevier, Elsevier, vol. 30(1), pages 96-110, February.
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