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Business cycle convergence in EMU: A first look at the second moment

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  • Jes?s Crespo-Cuaresma

    ()

  • Octavio Fern?ndez-Amador

    ()

Abstract

We propose the analysis of the dynamics of the standard deviation of business cycles across euro area countries in order to evaluate the patterns of cyclical convergence in the European Monetary Union for the period 1960-2008. We identify significant business cycle divergence taking place in the mid-eighties, followed by a persistent convergence period spanning most of the nineties. This convergent episode finishes roughly with the birth of the European Monetary Union. A hypothetical euro area including all the new members of the recent enlargements does not imply a sizeable decrease in the optimality of the currency union. Finally, the European synchronization differential with respect to other developed economies seems to have been diluted within a global cycle since 2004.

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Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2010-22.

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Length: 46
Date of creation: Aug 2010
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Handle: RePEc:inn:wpaper:2010-22

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Keywords: Business cycles; business cycle convergence; European Monetary Union.;

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Citations

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Cited by:
  1. Martin Gächter & Aleksandra Riedl & Doris Ritzberger-Grünwald, 2012. "Business Cycle Synchronization in the Euro Area and the Impact of the Financial Crisis," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 33–60.
  2. Crespo-Cuaresma, Jesús & Fernández-Amador, Octavio, 2013. "Business cycle convergence in EMU: A second look at the second moment," Journal of International Money and Finance, Elsevier, Elsevier, vol. 37(C), pages 239-259.
  3. Jesús Crespo-Cuaresma & Michael Pfaffermayr & Octavio Fernández Amador & Catherine Keppel, 2011. "Macroeconomic Aspects of European Integration: Fiscal Policy, Trade Integration and the European Business Cycle," FIW Research Reports series, FIW III-004, FIW.
  4. Timo Baas, 2014. "Stability and Eurozone membership: Should a small transition country join?," EcoMod2014 6916, EcoMod.
  5. 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.
  6. Mihaela Simionescu, 2014. "Testing the Convergence Hypothesis in the European Union," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(1), pages 222-229, May.
  7. Triandafil, Cristina Maria, 2011. "The Analysis Of The Convergence Criteria. Empirical Perspective In The Context Of The Sustainable Character Highlight," Working Papers of National Institute of Economic Research, National Institute of Economic Research 111205, National Institute of Economic Research.
  8. TRIANDAFIL, Cristina Maria, 2013. "Sustainability of convergence in the context of macro-prudential policies in the European Union," Working Papers of National Institute of Economic Research, National Institute of Economic Research 130618, National Institute of Economic Research.
  9. Petr Rozmahel & Ladislava Grochová & Marek Litzman, 2014. "The effect of asymmetries in fiscal policy conducts on business cycle correlation in the EU," WWWforEurope Working Papers series 62, WWWforEurope.
  10. Gächter, Martin & Riedl , Aleksandra & Ritzberger-Grünwald, Doris, 2013. "Business cycle convergence or decoupling? Economic adjustment in CESEE during the crisis," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 3/2013, Bank of Finland, Institute for Economies in Transition.

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