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Germany and the European Business Cycle - An Analysis of Causal Relations in an International Real Business Cycle Model

  • Ferdinand Fichtner

    ()

This paper studies the role of the German economy for the existence of the so called European business cycle, a term referring to the regularly observed synchronization of the national business cycles in Europe. Using a three-country general equilibrium model, we are able to simulate impulse response functions mimicking the important features observed in the data. Focusing on the importance of shocks affecting the German GDP we show that trade-related transmission from Germany to the other European economies is only of minor importance for the synchronization of national business cycles. On the contrary, our findings suggest that the influence of common shocks and of technology spillovers accounts for most of the parallels in economic performance.

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File URL: http://www.iwp.uni-koeln.de/fileadmin/contents/dateiliste_iwp-website/publikationen/DP/DP_01_2003.pdf
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Paper provided by Institute for Economic Policy, Cologne, Germany in its series IWP Discussion Paper Series with number 01/2003.

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Length: 24 pages
Date of creation: May 2003
Date of revision:
Handle: RePEc:kln:iwpdip:dp01/03
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  8. Nelson, Charles R & Kang, Heejoon, 1979. "Spurious Periodicity in Inappropriately Detrended Time Series," The Warwick Economics Research Paper Series (TWERPS) 161, University of Warwick, Department of Economics.
  9. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
  10. Gregory, Allan W & Head, Allen C & Raynauld, Jacques, 1997. "Measuring World Business Cycles," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 677-701, August.
  11. J. E. Stiglitz, 1999. "Introduction," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 28(3), pages 249-254, November.
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  14. Mike Artis & Hans-Martin Krolzig & Juan Toro, 2002. "The European Business Cycle," Economic Working Papers at Centro de Estudios Andaluces E2002/19, Centro de Estudios Andaluces.
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  16. Wesley Clair Mitchell, 1927. "Business Cycles: The Problem and Its Setting," NBER Books, National Bureau of Economic Research, Inc, number mitc27-1.
  17. Robert Inklaar & Jakob de Haan, 2000. "Is there Really a European Business Cycle?," CESifo Working Paper Series 268, CESifo Group Munich.
  18. Anderson, H.M. & Kwark, N.-S. & Vahid, F., 1999. "Does International Trade Synchronize Business Cycles?," Monash Econometrics and Business Statistics Working Papers 8/99, Monash University, Department of Econometrics and Business Statistics.
  19. Douglas Laxton & Eswar Prasad, 2000. "International Spillovers of Macroeconomic Shocks; A Quantitative Exploration," IMF Working Papers 00/101, International Monetary Fund.
  20. Robert G. King & Sergio T. Rebelo, 2000. "Resuscitating Real Business Cycles," NBER Working Papers 7534, National Bureau of Economic Research, Inc.
  21. Lucas, Robert E., 1977. "Understanding business cycles," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 5(1), pages 7-29, January.
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  24. Mills, Terence C & Holmes, Mark J, 1999. "Common Trends and Cycles in European Industrial Production: Exchange Rate Regimes and Economic Convergence," Manchester School, University of Manchester, vol. 67(4), pages 557-87, September.
  25. Canova, Fabio & Marrinan, Jane, 1998. "Sources and propagation of international output cycles: Common shocks or transmission?," Journal of International Economics, Elsevier, vol. 46(1), pages 133-166, October.
  26. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
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