Business Cycle Synchronisation with(in) the Euro Area: in Search of a ‘Euro Effect’

Weyerstraß, Klaus; Aarle, Bas van; Kappler, Marcus; Seymen, Atılım

doi:10.1007/s11079-009-9131-y

Cited by 27 publications

(23 citation statements)

References 13 publications

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“…The positive effects of EMU on business cycle synchronization are confirmed, with albeit different statistical methods, by Altavilla (2004), Gogas (2013), Darvas and Szapáry (2008), Gonçalves et al (2009), among others, as well as for different proxies for economic activity such as industrial production (Gayer, 2007) or economic sentiment indicators (Aguiar-Conraria et al, 2013). On the other hand, other studies fail to detect any EMU effect on business cycle synchronization (Camacho et al, 2006;Weyerstrass et al, 2011), or find even a dampening one (Papageorgiou et al, 2010).…”

mentioning

confidence: 89%

“…the evolution of the cyclical component of GDP around its long-term trend instead of the classical cycle that is focused on the fluctuations of aggregate economic activity. 10 The literature proposes several different methods to separate the long-term growth trend from the cyclical component (Weyerstrass et al, 2011). For our study, we employ the Hodrick-Prescott (HP) filter (Hodrick and Prescott, 1997) to detrend the national real GDP series.…”

Section: Calculating Business Cyclesmentioning

confidence: 99%

“…Another way to examine the co-movement between country pairs are so-called "rolling window" correlation coefficients, an approach widely used in the business cycle literature (Weyerstrass et al, 2011). In contrast to rolling window correlation coefficients, the proposed correlation index provides distinct advantages: first, there is no loss of observations, second, there is no need to set a an arbitrary window-length, and, third, it is easier to implement in econometric analysis since rolling-window correlations suffer from heavy autocorrelation and hence heavily autocorrelated dependent variables.…”

Section: Correlation Indexmentioning

confidence: 99%

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Business Cycle Synchronization in the EMU: Core vs. Periphery

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editors. Terms of use: Documents in Ruhr Economic Papers #659

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mentioning

confidence: 89%

Section: Calculating Business Cyclesmentioning

confidence: 99%

Section: Correlation Indexmentioning

confidence: 99%

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Business Cycle Synchronization in the EMU: Core vs. Periphery

2017

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“…instead of cyclical components. Weyerstrass et al (2011) and Furceri and Karras (2008) provide comprehensive analyses based on pre-and post-EMU descriptive comparisons of various business cycle measures. Thus, their findings are not directly comparable to our results which are derived from a regression-based panel analysis where we are able to control for important determinants of business cycle synchronization.…”

Section: Introductionmentioning

confidence: 99%

One money, one cycle? The EMU experience

Gächter

Riedl

2014

Journal of Macroeconomics

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JEL classification: E02 E32 E58 F15 F33 a b s t r a c tWe examine whether the introduction of the euro had a significant impact on the synchronization of business cycles among members of Economic and Monetary Union (EMU). Empirical evidence on this relationship is rare so far and suffers from methodical weaknesses, such as the absence of time variability, which is crucial for addressing this issue. Using a synchronization index that is constructed on a year-by-year basis (1993-2011), we uncover a strong and robust empirical finding: the adoption of the euro has significantly increased the correlation of member countries' business cycles above and beyond the effect of higher trade integration. Thus, our results substantially strengthen the conclusion by Frankel and Rose (1998), i.e. a country is more likely to satisfy the criteria for entry into a currency union ex post rather than ex ante. Remarkably, however, this reasoning is even verified when controlling for the effect of increased trade linkages implied by entering a currency union.

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“…Firstly, if inflation rates differ largely between regions, monetary policy can hardly satisfy the needs of all regions equally (Weber and Beck 2005;Mundel 1961;Weyerstrass et al 2011), such that places which experience high inflation rates naturally require a contractionary monetary policy, while those which experience low inflation need rather an expansionary monetary stance (Weber and Beck 2005). Furthermore, inflation differentials are likely to create regional dispersion in the real interest rates, which are likely to induce differential effects on local economic growth (Yılmazkuday 2013).…”

mentioning

confidence: 99%