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Business cycle synchronicity, amplitude and the euro: one size does not yet fit all

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  • Wälti, Sébastien

Abstract

This paper focuses on the impact of the euro on the degree of business cycle synchronisation between nineteen advanced economies over the period 1980-2008. In contrast with the existing evidence based on correlation coefficients, we assess the impact of the euro on the synchronicity and the relative amplitude of business cycles separately. We find that although the introduction of the euro has raised the likelihood of business cycle synchronicity, it has not affected the relative amplitude of business cycles. Hence, the common monetary policy has become increasingly suitable for members in terms of the needed direction of policy moves, but not in terms of the required magnitude of these moves.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 21065.

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Date of creation: Aug 2009
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Handle: RePEc:pra:mprapa:21065

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Related research

Keywords: euro; monetary union; business cycle; synchronisation; probit;

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