Business Cycle Synchronization in EU Economies after the Recession of the Years 2007-2009

The aim of the study is to evaluate business cycle synchronization in the EU economies including determination of the impact of the global financial and economic recession of the years 2007-2009. In general, the economic recession can be understood as one of the phase of the global business cycle because all countries had suffered somehow from this enormous collapse. It is commonly assumed that GDP series in constant prices measure both: business activity and business cycle. In the presented research seasonally adjusted quarterly GDP series from the years 1995-2012 were analyzed. We proposed to apply the tools of cross-spectral analysis such as coherence, phase and amplitude of the specified frequencies taking into account the time window of 48 quarters. Such a procedure allows indicating a rapid change in business cycle synchronization conditionally on the period of the analysis that includes the years 2007-2009. The empirical findings show that the assumption of business cycle synchronization within the EU was confirmed for the strongest economies of the European Union like Germany, Great Britain or France. Moreover, Poland and Spain can also be included to the club of synchronized economies. Other EU economies, like Hungarian, Italian and Portugal were less synchronized with the EU business cycle, although in the period of crisis they were closer to the whole economic area. For the non-EU countries, significantly weaker synchronization with the EU was observed. The hypothesis that the financial crisis caused similarities in the business cycle paths of the EU countries and the USA was confirmed, while for Japan and Switzerland it could not be confirmed in the light of the obtained results.