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Are European Business Cycles Close Enough to be Just One?

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Author Info
Camacho, Maximo
Pérez-Quirós, Gabriel
Sáiz Matute, Lorena

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Abstract

We propose a comprehensive methodology to characterize the business cycle comovements across European economies and some industrialized countries, always trying to ‘let the data speak’. Out of this framework, we propose a novel method to show that there is no ‘Euro economy’ that acts as an attractor to the other economies of the area. We show that the relative comovements across EU economies are prior to the establishment of the Monetary Union. We are able to explain an important proportion of the distances across their business cycles using macro-variables related to the structure of the economy, to the directions of trade, and to the size of the public sector. Finally, we show that the distances across countries that belong to the European Union are smaller than the distances across newcomers.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4824.

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Date of creation: Jan 2005
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Handle: RePEc:cpr:ceprdp:4824

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Related research
Keywords: business cycle synchronization; cluster analysis; economic integration; european union enlargement; multidimensional scaling;

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Find related papers by JEL classification:
C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General

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  21. Boone, Laurence & Maurel, Mathilde, 1999. "An Optimal Currency Area Perspective of the EU Enlargement to the CEECs," CEPR Discussion Papers 2119, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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