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Euro Area business cycles in turbulent times: convergence or decoupling?

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Abstract

We study the business cycles properties of the four largest European economies in the wake of the recent recession episodes. The analysis is based on the factors estimated from a multi-country and multi-sector data rich environment. We measure alikeness of business cycles by studying the synchronization of up and down phases, the convergence properties of country fluctuations towards the Euro Area cycles and the contribution of the Euro Area factor to national GDPs volatilities. While the economic fluctuations of the four Euro Area member states were similar before the global financial turmoil, we gather compelling evidence of an asymmetric behavior of Spanish fluctuations relative to the Euro Area one.

Suggested Citation

  • F. Ferroni & B. Klaus, 2014. "Euro Area business cycles in turbulent times: convergence or decoupling?," Working papers 522, Banque de France.
  • Handle: RePEc:bfr:banfra:522
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    More about this item

    Keywords

    Hierarchical factor models; International business cycles; Synchronization and Convergence.;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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