Duality in Cyclical Trends in European Union Confirmed

This article differentiates the euro-economies in terms of the degree of synchronization with the cyclical position of Germany perceived herein as a hegemon economy. The purpose of this study is the identification of the euro-economies that can be identified as an effective monetary area in terms of similarity in economic structure with German economy. The cyclical position is expressed as an average of absolute values of differences of the output gaps between euro-countries and Germany. This procedure is supplemented by correlation and comparative analysis and with the assessment of empirical findings. Two groups are identified according to similarities in cyclical positions. Similar economic performance was ascertained in Austria, Belgium, France, Luxembourg, the Netherlands, and Finland, the economies of which are thus labeled as an effective currency region in the sense of optimum currency area. The assessment of the future development in Eurozone is made taking into account the current political and economic circumstances and the outputs of empirical analyses.