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Similarity of Supply and Demand Shocks Between the Euro Area and the CEECs

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  • Fidrmuc, Jarko

    (Osterreichische Nationalbank)

  • Iikka Korhonen

Abstract

We assess the correlation of supply and demand shocks between the countries of the euro area and the accession countries in the 1990s. Shocks are recovered from estimated structural VAR models of output growth and inflation. We find that some accession countries have a quite high correlation of the underlying shocks with the euro area. However, even for many advanced accession countries, the shocks remain significantly more idiosyncratic. Continuing integration within the EU is likely to align the business cycles of these countries similarly to the sync

Suggested Citation

  • Fidrmuc, Jarko & Iikka Korhonen, 2003. "Similarity of Supply and Demand Shocks Between the Euro Area and the CEECs," Royal Economic Society Annual Conference 2003 77, Royal Economic Society.
  • Handle: RePEc:ecj:ac2003:77
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    More about this item

    Keywords

    optimum currency area; EU enlargement; structural VAR;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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