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

  • Crespo-Cuaresma, Jesús
  • Fernández-Amador, Octavio

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. We show that a hypothetical euro area including all the new members of the recent enlargement rounds 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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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 37 (2013)
Issue (Month): C ()
Pages: 265-284

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Handle: RePEc:eee:jmacro:v:37:y:2013:i:c:p:265-284
DOI: 10.1016/j.jmacro.2013.02.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

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