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Output growth differentials across the euro area countries - some stylised facts


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  • Nicholai Benalal
  • Juan Luis Diaz del Hoyo
  • Beatrice Pierluigi
  • Nikiforos Vidalis
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    The aim of this study is to investigate the extent to which the dispersion of real GDP growth rates has changed over the past few years and whether the synchronisation of business cycles has increased among the euro area countries. The study is divided into two main parts. The f irst focuses on the dispersion of real GDP growth rates across the euro area countries, while the second studies the synchronisation of business cycles within the euro area. The study shows first that dispersion of real GDP growth rates across the euro area countries in both unweighted and weighted terms has no apparent upward or downward trend during the period 1970-2004 as a whole. Second, since the beginning of the 1990s, the dispersion of real GDP growth rates across the euro area countries has largely reflected lasting trend growth differences, and less so cyclical differences, with some countries persistently exhibiting output growth either above or below the euro area average. Among other things, this might be due to different trends in demographics, as well as to differences in structural reforms undertaken in the past. Thirdly, the degree of synchronisation of business cycles across the euro area countries seems to have increased since the beginning of the 1990s. This f inding holds for various measures of synchronisation applied to overall activity and to the cyclical component, for annual and quarterly data, as well as for various country groupings. In particular, the degree of correlation currently appears to be at a historical high. In addition to these main findings, certain other stylised facts on dispersion and synchronisation are presented. JEL Classification: C10; E32; O40.

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    Bibliographic Info

    Paper provided by European Central Bank in its series Occasional Paper Series with number 45.

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    Length: 79 pages
    Date of creation: May 2006
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    Handle: RePEc:ecb:ecbops:20060045

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    Keywords: Dispersion of GDP growth across the euro area countries; trend and cycle; synchronisation of business cycles within the euro area.;

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    Cited by:
    1. Alexandra Flayols, 2011. "Hétérogénéité de la zone euro et politique monétaire," Post-Print, HAL dumas-00647031, HAL.
    2. Catherine Mathieu & Henri Sterdyniak, 2007. "How to deal with economic divergences in EMU ?," Sciences Po publications, Sciences Po 2007-14, Sciences Po.
    3. Gebhard Flaig & Timo Wollmershäuser, 2007. "Does the Euro-zone Diverge? A Stress Indicator for Analyzing Trends and Cycles in Real GDP and Inflation," CESifo Working Paper Series, CESifo Group Munich 1937, CESifo Group Munich.
    4. Kristin Langwasser, 2009. "Global current account adjustment: trade implications for the euro area countries," International Economics and Economic Policy, Springer, Springer, vol. 6(2), pages 115-133, July.
    5. Mongelli, Francesco Paolo & Vega, Juan Luis, 2006. "What effects is EMU having on the euro area and its member countries? An overview," Working Paper Series, European Central Bank 0599, European Central Bank.
    6. Fagan, Gabriel & Gaspar, Vítor, 2007. "Adjusting to the euro," Working Paper Series, European Central Bank 0716, European Central Bank.
    7. Eickmeier, Sandra, 2006. "Comovements and heterogeneity in the Comovements and heterogeneity in the dynamic factor model," Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank, Research Centre 2006,31, Deutsche Bundesbank, Research Centre.
    8. Merkl, Christian & Schmitz, Tom, 2011. "Macroeconomic volatilities and the labor market: First results from the euro experiment," European Journal of Political Economy, Elsevier, Elsevier, vol. 27(1), pages 44-60, March.
    9. Siedschlag, Iulia, 2009. "Macroeconomic Differentials and Adjustment in the Euro Area," Papers, Economic and Social Research Institute (ESRI) RB2009/3/1, Economic and Social Research Institute (ESRI).
    10. Catherine Mathieu & Henri Sterdyniak, 2007. "Comment expliquer les disparités économiques dans l'UEM ?," Sciences Po publications, Sciences Po info:hdl:2441/5284, Sciences Po.
    11. Brissimis, Sophocles N. & Skotida, Ifigeneia, 2008. "Optimal monetary policy in the euro area in the presence of heterogeneity," Journal of International Money and Finance, Elsevier, Elsevier, vol. 27(2), pages 209-226, March.
    12. Nadine Leiner-Killinger & Víctor López Pérez & Roger Stiegert & Giovanni Vitale, 2007. "Structural reforms in EMU and the role of monetary policy – a survey of the literature," Occasional Paper Series, European Central Bank 66, European Central Bank.
    13. Barrett, Alan & Bergin, Adele & FitzGerald, John & Traistaru-Siedschlag, Iulia, 2006. "Economic Assessment of the Euro Area: Forecasts and Policy Analysis, Autumn Report 2006," Research Series, Economic and Social Research Institute (ESRI), Economic and Social Research Institute (ESRI), number sustat22.
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