Are European business cycles close enough to be just one?

Abstract

We propose a comprehensive methodology to characterize the business cycle comovements across European economies and some industrialized countries, without imposing any given model but trying to 'leave the data speak'. We develop a novel method to show that there is no evidence of a 'European economy' that acts as an attractor to the other economies of the area. We show that the establishment of the Monetary Union has not significantly increased the level of comovements across Euro-area economies. Finally, we are able to explain an important proportion of the distances across their business cycles using macrovariables related to the structure of the economy, to the directions of trade, and to the size of the public sector. r

Business Cycles, Core, and Periphery in Monetary Unions: Comparing Europe and North America

“…For instance, Inklaar and de Haan (2001) report a decrease in business cycle synchronization of countries belonging to the EMS with the German economy since the 1970s. Camacho et al (2006) fail to find evidence of the existence of a common driving force or attractor in European countries' business cycles. Mink et al (2007) conclude that business cycle synchronization and co-movement for the euro area do not exhibit a clear upward trend in the 1970-2005 period, and that national business cycles are still significantly different.…”

An Output Gap Measure for the Euro Area: Exploiting Country-Level and Cross-Sectional Data Heterogeneity

“…However, Camacho, Perez-Quiros and Saiz (2006) warn that assuming that a European cycle exists and that it coincides either with the cycle of a leading European economy, the cycle of a weighted average of several European economies, or the cycle of a common factor, should be done cautiously. The authors use cluster analysis to find out if there is a "European business cycle" that links the European economies.…”

Synchronisation des chocs d’offre et de demande en Europe – Un après-euro ou une après-crise des subprimes ?

“…La première s'intéresse à la synchronisation des cycles d'affaires. Il s'agit par exemple des travaux de Artis et Zhang (1997), Camacho, Perez-Quiros et Saiz (2005 ou encore Eickmeier et Breitung (2006). La seconde se base sur les travaux de Bayoumi et Eichengreen (1992) et met en évidence les chocs d'offre et de demande supportés par les économies considérées par l'intermédiaire d'un modèle VAR structurel.…”