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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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    1. Les cycles d’affaires se sont-ils synchronisés en zone euro ?
      by ? in D'un champ l'autre on 2014-11-24 04:29:00

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    2. Bofinger, Peter & Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Wieland, Volker, 2018. "Vor wichtigen wirtschaftspolitischen Weichenstellungen. Jahresgutachten 2018/19," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201819.
    3. Uctum Merih & Uctum Remzi & Vijverberg Chu-Ping C., 2021. "The European growth synchronization through crises and structural changes," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 25(1), pages 1-17, February.
    4. Dionysios Chionis & Fotios Mitropoulos & Antonios Sarantidis, 2021. "Business cycles and macroeconomic asymmetries: New evidence from Eurozone and European countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5977-5996, October.
    5. Maximo Camacho & Angela Caro & German Lopez-Buenache, 2020. "The two-speed Europe in business cycle synchronization," Empirical Economics, Springer, vol. 59(3), pages 1069-1084, September.
    6. Katerina Arnostova & Oxana Babecka Kucharcukova & Jan Babecky & Vojtech Belling & Sona Benecka & Jan Bruha & Martin Gurtler & Tomas Holub & Eva Hromadkova & Lubos Komarek & Zlatuse Komarkova & Petr Kr, 2016. "Analyses of the Czech Republic's Current Economic Alignment with the Euro Area 2016," Occasional Publications - Edited Volumes, Czech National Bank, number as16 edited by Katerina Arnostova & Lucie Matejkova, September.
    7. Merih Uctum & Remzi Uctum & Chu-Ping C. Vijverberg, 2017. "The Eurozone Convergence through Crises and Structural Changes," EconomiX Working Papers 2017-38, University of Paris Nanterre, EconomiX.
    8. Anna Iara, 2016. "Revenue for EMU: A Contribution to the Debate on Fiscal Union," CESifo Economic Studies, CESifo, vol. 62(2), pages 301-331.
    9. Thomas Lux & Duc Thi Luu & Boyan Yanovski, 2020. "An analysis of systemic risk in worldwide economic sentiment indices," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(4), pages 909-928, November.
    10. Ansgar Belke & Clemens Domnick & Daniel Gros, 2017. "Business Cycle Synchronization in the EMU: Core vs. Periphery," Open Economies Review, Springer, vol. 28(5), pages 863-892, November.
    11. Beck, Krzysztof, 2021. "Why business cycles diverge? Structural evidence from the European Union," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    12. Tomas Adam & Oxana Babecka Kucharcukova & Jan Babecky & Vojtech Belling & Sona Benecka & Jan Bruha & Kamil Galuscak & Tomas Holub & Eva Hromadkova & Lubos Komarek & Zlatuse Komarkova & Kamila Kulhava , 2015. "Analyses of the Czech Republic's Current Economic Alignment with the Euro Area 2015," Occasional Publications - Edited Volumes, Czech National Bank, number as15 edited by Kamila Kulhava & Lucie Matejkova, September.
    13. Caro Navarro, Ángela & Peña, Daniel, 2018. "Estimation of the common component in Dynamic Factor Models," DES - Working Papers. Statistics and Econometrics. WS 27047, Universidad Carlos III de Madrid. Departamento de Estadística.
    14. Luu, Duc Thi & Yanovski, Boyan & Lux, Thomas, 2018. "An analysis of systematic risk in worldwide econonomic sentiment indices," Economics Working Papers 2018-03, Christian-Albrechts-University of Kiel, Department of Economics.
    15. Katerina Arnostova & Tomas Adam & Oxana Babecka Kucharcukova & Jan Babecky & Vojtech Belling & Sona Benecka & Jan Bruha & Martin Gurtler & Tibor Hledik & Tomas Holub & Eva Hromadkova & Lubos Komarek &, 2017. "Analyses of the Czech Republic's Current Economic Alignment with the Euro Area 2017," Occasional Publications - Edited Volumes, Czech National Bank, number as17 edited by Katerina Arnostova & Lucie Matejkova, September.
    16. Neri, Stefano & Nobili, Andrea & Conti, Antonio M., 2017. "Low inflation and monetary policy in the euro area," Working Paper Series 2005, European Central Bank.
    17. Jesús Ferreiro & Catalina Gálvez & Carmen Gómez & Ana González, 2017. "Economic Crisis and Convergence in the Eurozone Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 64(2), pages 223-244, March.
    18. Maximo Camacho & Angela Caro & German Lopez-Buenache, 0. "The two-speed Europe in business cycle synchronization," Empirical Economics, Springer, vol. 0, pages 1-16.
    19. Ahlborn, Markus & Wortmann, Marcus, 2018. "The core‒periphery pattern of European business cycles: A fuzzy clustering approach," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 12-27.
    20. Krzysztof Beck, 2021. "Capital mobility and the synchronization of business cycles: Evidence from the European Union," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 1065-1079, September.

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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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