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Continuing Integration in Europe? Some empirical evidence on European industrial production cycle


  • Petr Rozmahel

    () (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)

  • Nikola Najman

    () (Department of Economics, Faculty of Business and Economics, Mendel University in Brno)


The paper deals with assessing the common trends in business cycle similarity and convergence in Europe. The main goal of the paper is to identify common cyclical co-movements and trends in convergence among the European countries so that the emerging European business cycle could be identified. Concerning the factors of business cycle, the research question of the paper is based on assumption that the integration effects are so dominant to bring the European cycle into existence. Also a potential influence of a global crisis on European and world business cycles is examined in the paper. The industrial production index is used to approximate business cycles. Hodrick-Prescott filter, Christiano-Fitzgerald filter and first differencing were used to dissect the cyclical components and identified the cycles in the data. The common co-movements, trends of convergence and divergence are identified using correlation analysis. Particularly, actual cross correlation and historical correlation in separated subsequent periods is applied in the analysis. The results do not provide an evidence of emerging European business cycle contrary to US cycle. The global economic crises was identified as a kind of negative symmetric shock pushing all major economies towards the recession phase of the cycle und thus increasing similarity. The results also shed some light on an influence of different detrending techniques when dissecting the cycles from the input macroeconomic time series.

Suggested Citation

  • Petr Rozmahel & Nikola Najman, 2012. "Continuing Integration in Europe? Some empirical evidence on European industrial production cycle," MENDELU Working Papers in Business and Economics 2012-26, Mendel University in Brno, Faculty of Business and Economics.
  • Handle: RePEc:men:wpaper:26_2012

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    business cycle; correlation; convergence; Eurozone; industrial production;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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