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Business cycle synchronization and the Euro: A wavelet analysis

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  • Aguiar-Conraria, LuI´s
  • Joana Soares, Maria

Abstract

We use wavelet analysis to study business cycle synchronization across the EU-15 and the Euro-12 countries. Based on the wavelet transform, we propose a metric to measure and test for business cycles synchronization. Several conclusions emerge. France and Germany form the core of the Euro land, being the most synchronized countries with the rest of Europe. Portugal, Greece, Ireland and Finland do not show statistically relevant degrees of synchronization with Europe. We also show that some countries (like Spain) have a French accent, while others have a German accent (e.g., Austria). Perhaps surprisingly, we find that the French business cycle has been leading the German business cycle as well as the rest of Europe. Among the countries that may, in the future, join the Euro, the Czech Republic seems the most promising candidate.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 33 (2011)
Issue (Month): 3 (September)
Pages: 477-489

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Handle: RePEc:eee:jmacro:v:33:y:2011:i:3:p:477-489

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Web page: http://www.elsevier.com/locate/inca/622617

Related research

Keywords: Business cycle synchronization European Union integration Continuous wavelet transform Wavelet distance matrix Multidimensional scaling;

References

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  12. Máximo Camacho & Gabriel Pérez-Quirós & Lorena Saiz, 2005. "Do european business cycles look like one?," Banco de Espa�a Working Papers 0518, Banco de Espa�a.
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