The euro goes East. Implications of the 2000-2002 economic slowdown for synchronisation of business cycles between the euro area and CEEs

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The euro goes East. Implications of the 2000-2002 economic slowdown for synchronisation of business cycles between the euro area and CEEs

Author Info

Fidrmuc, Jarko () (BOFIT)
Korhonen, Iikka () (BOFIT)

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Abstract

We assess the correlation of supply and demand shocks between current countries in the euro area and EU accession candidates from 1993/1995 to 2002. Supply and demand shocks are recovered from estimated structural VAR models of output growth and inflation. Notably, the economic slowdown between 2000 and 2002 increased heterogeneity of business cycles between the euro area and acceding counties. We find that several acceding countries have a quite high correlation of underlying shocks with the euro area and conclude that continuing integration within the EU is likely to align the business cycles of these countries in a manner similar to the synchronisation of supply and demand shocks we document for the EU in the 1990s.

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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 6/2003.

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Length: 24 pages
Date of creation: 25 May 2003
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Handle: RePEc:hhs:bofitp:2003_006

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Paper
- Iikka Korhonen & Jarko Fidrmuc, 2003. "The euro goes East. Implications of the 2000-2002 economic slowdown for synchronisation of business cycles between the euro area and CEEs," Macroeconomics 0305007, EconWPA. [Downloadable!]

Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-09-09 (All new papers)
NEP-CBA-2007-09-09 (Central Banking)
NEP-EEC-2007-09-09 (European Economics)
NEP-MAC-2007-09-09 (Macroeconomics)
NEP-MON-2007-09-09 (Monetary Economics)

References listed on IDEAS
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Other versions:
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Other versions:
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Other versions:
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Other versions:
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