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Business cycle synchronisation between the V4 countries and the euro area

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  • Michal Bencik

    () (National Bank of Slovakia, Research Department)

Abstract

Business cycle synchronisation between the V4 countries and the euro area is important in regard to the costs of the common monetary policy. This paper addresses the issue of business cycle synchronisation by directly calculating cross correlations, by calculating cross correlations from primary impulses, and finally by calculating output gap component correlations from common and country-specific shocks. In regard to the output gap, the results of all three methods are approximately the same: before 2001, the business cycles of the V4 countries were not synchronised with the euro area (low or negative correlations); between 2001 and 2007, the correlations entered positive territory as the V4 countries joined the EU and trade between the V4 countries and the euro area increased; and during the economic crisis of 2008–2009, synchronisation increased still further.

Suggested Citation

  • Michal Bencik, 2011. "Business cycle synchronisation between the V4 countries and the euro area," Working and Discussion Papers WP 1/2011, Research Department, National Bank of Slovakia.
  • Handle: RePEc:svk:wpaper:1013
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:series:v:9:y:2018:i:2:d:10.1007_s13209-017-0170-0 is not listed on IDEAS
    2. Kolasa, Marcin, 2013. "Business cycles in EU new member states: How and why are they different?," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 487-496.

    More about this item

    Keywords

    optimum currency area; business cycle; autoregressive model; SVAR;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F02 - International Economics - - General - - - International Economic Order and Integration

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