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

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  • Klaus, Benjamin
  • Ferroni, Filippo

Abstract

We study the business cycle properties of the four largest euro area 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 GDP 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 behaviour of Spanish fluctuations relative to the euro area one. JEL Classification: C51, E32, O52

Suggested Citation

  • Klaus, Benjamin & Ferroni, Filippo, 2015. "Euro area business cycles in turbulent times: convergence or decoupling?," Working Paper Series 1819, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20151819
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    More about this item

    Keywords

    Hierarchical factor models; International business cycles; Synchronization and Convergence ECB;
    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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