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Convergence between the business cycles of Central and Eastern European countries and the Euro area

  • Nenad Stanisic

    ()

    (University of Kragujevac, Faculty of Economics)

Although entry to the Euro area (EA) is based only on fulfilment of the Maastricht criteria, implementation of optimum currency criteria and real economic convergence determines the benefits and costs of monetary integration. This paper focuses on the synchronization of business cycles among Central and Eastern European countries (CEECs) and the EA. Business cycles are extracted from GDP data series using a double Hodrick–Prescott filter method. The degree of co-movement of cycles is evaluated on the basis of various methods of rolling correlation. Results show that there is no common CEE business cycle, although a synchronization trend is evident. Similarly, there is a strong trend of convergence of CEEC national business cycles toward that of the EA.

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Article provided by Baltic International Centre for Economic Policy Studies in its journal Baltic Journal of Economics.

Volume (Year): 13 (2013)
Issue (Month): 1 (July)
Pages: 63-74

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Handle: RePEc:bic:journl:v:13:y:2013:i:1:p:63-74
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  1. Jarko Fidrmuc & Iikka Korhonen, 2006. "Meta-Analysis of the Business Cycle Correlation between the Euro Area and the CEECs," CESifo Working Paper Series 1693, CESifo Group Munich.
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  10. Fabrizio Carmignani, 2005. "The Characteristics of Business Cycles in Selected European Emerging Market Economies," ECE Discussion Papers Series 2005_7, UNECE.
  11. Traistaru, Iulia, 2004. "Transmission channels of business cycles synchronization in an enlarged EMU," ZEI Working Papers B 18-2004, ZEI - Center for European Integration Studies, University of Bonn.
  12. Brada, Josef C. & Kutan, Ali M. & Zhou, Su, 2005. "Real and monetary convergence between the European Union's core and recent member countries: A rolling cointegration approach," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 249-270, January.
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