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How Similar Are European Business Cycles?

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  • Bergman, Michael

    ()
    (Department of Economics, Lund University)

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    Abstract

    In this paper, we focus on how European economic integration has affected the synchronization and the magnitude of business cycles among participating countries. We measure, based on bandpass filtered data, the characteristics of European business cycles analyzing to what extent they have become more similar over time. We also consider the role of other factors such as differences in fiscal and monetary policy, border effects, and trade intensity. Our main finding is that European business cycles are highly synchronized, although we also find that synchronization was higher during periods with highly flexible exchange rates. In addition we find a positive tradeoff between timing and magnitude such that more synchronization coincides with larger relative magnitude. These results raise concern about the consequences of a common monetary policy within EMU.

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    File URL: http://project.nek.lu.se/publications/workpap/Papers/WP04_9.pdf
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    Bibliographic Info

    Paper provided by Lund University, Department of Economics in its series Working Papers with number 2004:9.

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    Length: 36 pages
    Date of creation: 11 Mar 2004
    Date of revision:
    Handle: RePEc:hhs:lunewp:2004_009

    Contact details of provider:
    Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
    Phone: +46 +46 222 0000
    Fax: +46 +46 2224613
    Web page: http://www.nek.lu.se/en
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    Related research

    Keywords: Business cycles; symmetry and co-movement of cycles; magnitude of cycles; economic integration; monetary union;

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    Cited by:
    1. Camacho, Maximo & Perez-Quiros, Gabriel & Saiz, Lorena, 2008. "Do European business cycles look like one?," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 32(7), pages 2165-2190, July.
    2. Everts, Martin, 2006. "Duration of Business Cycles," MPRA Paper 1219, University Library of Munich, Germany.
    3. Saša Obradović & Vladimir Mihajlović, 2013. "Synchronization of Business Cycles in the Selected European Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(6), pages 759-773, December.
    4. Ewa Szymanik, 2012. "Business Cycles and Their International Transmission – the Introduction to the Problem," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 7, pages 55-72.
    5. Yasuyuki Komaki & Nobuo Iizuka, 2010. "Some aspects of the OECD business cycle - The effects of EMU -," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, Policy Research Institute, Ministry of Finance Japan, vol. 6(2), pages 199-236, March.
    6. Jacques Pelkmans & Lourdes Acedo Montoya & Alessandro Maravalle, 2008. "How product market reforms lubricate shock adjustment in the euro area," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 341, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
    7. Maximo Camacho & Gabriel Perez-Quiros & Lorena Saiz & Universidad de Murcia, 2006. "Do european business cycles look like one $\_?$," Computing in Economics and Finance 2006, Society for Computational Economics 175, Society for Computational Economics.
    8. Robert Inklaar & Richard Jong-A-Pin & Jakob de Haan, 2005. "Trade and Business Cycle Synchronization in OECD Countries - a Re-examination," CESifo Working Paper Series 1546, CESifo Group Munich.
    9. Pytlarczyk, Ernest, 2005. "An estimated DSGE model for the German economy within the euro area," Discussion Paper Series 1: Economic Studies 2005,33, Deutsche Bundesbank, Research Centre.
    10. Eickmeier, Sandra, 2006. "Comovements and heterogeneity in the Comovements and heterogeneity in the dynamic factor model," Discussion Paper Series 1: Economic Studies 2006,31, Deutsche Bundesbank, Research Centre.
    11. Papageorgiou, Theofanis & Michaelides, Panayotis G. & Milios, John G., 2010. "Business cycles synchronization and clustering in Europe (1960-2009)," Journal of Economics and Business, Elsevier, Elsevier, vol. 62(5), pages 419-470, September.
    12. Everts, Martin, 2006. "Sectoral and Industrial Business Cycles," MPRA Paper 1176, University Library of Munich, Germany.
    13. Luigi Bocola, 2006. "Trade and Business-Cycle Comovement: Evidence from the EU," Rivista di Politica Economica, SIPI Spa, SIPI Spa, vol. 96(6), pages 25-62, November-.

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