Business Cycle Synchronization in the Enlarged EU

Darvas, Ζsolt; Szapáry, György

doi:10.1007/s11079-007-9027-7

Cited by 122 publications

(92 citation statements)

References 32 publications

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“…However, only Hungary and Poland among the Visegrad countries reached high synchronization. Artis et al (2004) and Darvas and Szapáry (2008) obtained the same results studying correlations between the business cycles of the EU and Hungary and Poland. In another model, Jagrič (2002) also implies that the economic co-movement of Hungary and Poland is high.…”

supporting

confidence: 52%

“…Fidrmuc and Korhonen (2006) conduct a meta-analysis of 35 studies involving the synchronization of the EU and CEE 1 The Visegrad countries also joined the North Atlantic Treaty Organization in 1999 and applied for membership in the European Union in [1995][1996]. 2 The literature focusing on the evolution and determinants of business cycle synchronization between Central and Eastern European (CEE) countries and the EU is extensive, e.g., Darvas and Szapáry (2008); Artis et al (2004); Backus et al (1992). countries and find a high level of synchronization between new member states and the EU.…”

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confidence: 99%

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Business Cycle Synchronization of the Visegrad Four and the European Union

Hanus

Vácha

2015

SSRN Journal

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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. Abstract: Terms of use: Documents inIn this paper, we map the process of synchronization of the Visegrad Four within the framework of the European Union using wavelet techniques. We show that the relationship of among countries is dynamic and that it varies over time and across frequencies. We study the synchronization applying the wavelet cohesion measure with time-varying weights. This novel approach allows us to study the dynamic relationship among countries from a different perspective than the usual timedomain models. Analyzing monthly data from 1990 to 2014, the results for the Visegrad region show an increasing co-movement with the European Union after the countries began preparing for accession to the European Union. Participation in a currency union possibly increases the co-movement. Furthermore, we find a high degree of synchronization in long-term horizons by analyzing the Visegrad Four and Southern European countries' synchronization with the core countries of the European Union.

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confidence: 52%

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confidence: 99%

Business Cycle Synchronization of the Visegrad Four and the European Union

Hanus

Vácha

2015

SSRN Journal

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“…They use a simple pairwise correlation coefficients of GDP and unemployment and find that all 12 countries in their sample are better synchronized with the common EUwide cycle after the start of the EMU. 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).…”

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confidence: 90%

Business Cycle Synchronization in the EMU: Core vs. Periphery

2017

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“…The most common methods in this field are the unconditional correlation between the two countries in different time periods, the identification of delays of various phases of business cycles, the volatility of cyclical fluctuations in economic activity, the stability and similarity of sudden and unexpected fluctuations in economic activity or the shock responses at the regional level within the Euro area (Darvas and Szapáry 2008) or the index of cyclical conformity, called the Concordance Index (Harding and Pagan 2006).…”

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confidence: 99%

The endogeneity of optimum currency area criteria in the context of financial crisis: Evidence from the time-frequency domain analysis

Kapounek¹,

Poměnková²

2013

AGR ECON-CZECH

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389The global financial crisis caused economic cycles in most European countries to become more strongly synchronized without increasing of the real convergence process. While there is a wide range of literature focused on the economic cycle synchronization within the Euro area, the developments since the crisis have not yet been researched in detail. The point is to filter the country-specific economic activity in order to eliminate this global symmetric shock from the time series. We apply the singular value decomposition to estimate the long-term trend in time series and the wavelet co-spectrum to identify the changes of co-movements at different frequencies over time.From the theoretical point of view, a currency union is expected to increase trade and financial integration because of the decrease in transaction costs and the elimination of the exchange rate risk. Frankel and Rose (1998) argued that the business cycles synchronization would be higher because of the demand shocks or the intra-industry trade. As well, they pioneered the idea of the hypothesis of the endogeneity of the Optimum Currency Area (OCA) criteria sig nificant relation between the historically greater integration and the more highly synchronized cycles.The endogeneity of the OCA criteria was discussed by many authors in several branches, which are not isolated between themselves. Zhang (1997, 1999) identified the positive impact of the fixed exchange rate on the business cycles synchronization, contributed by growing trade links between the EU countries. The endogeneity of symmetric shocks and trade was followed by Fontagné (1999), Fidrmuc (2004, Artis et al. (2008) and many others. Blanchard and Wolfers (2000) focused on the endogeneity of labour market institutions, Kalemli-Ozcan et al. (2003) provide the empirical evidence that the risk sharing within the Euro area enhances specialization in production.The hypothesis assumes that the EU accessing countries would be expected to meet the OCA criteria better ex post than ex ante, which is an important topic in discussion about the benefits and costs of adopting a common currency. Joining a currency area is related with the loss of autonomous monetary policy and the exchange rate control. The traditional version of the OCA theory argues that joining costs are minimized and the benefits maximized with a high degree of cyclical and structural synchronization (Corden 1972).However, the recent financial crisis confirmed the Lucas Critique. Lucas (1976) assumed that the structure of all econometric models is not applicable for We provide the wavelet analysis of the economic cycle synchronization during the recent fi nancial crisis. However, the global fi nancial crisis caused economic cycles in most European countries to become more strongly synchronized without increasing of the real convergence process. Our contribution is an application of the singular value decomposition to identify and remove the long-term trend including outliers appearing in the year 2007-2010. We found that the his...

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Business Cycle Synchronization in the Enlarged EU

Cited by 122 publications

References 32 publications

Business Cycle Synchronization of the Visegrad Four and the European Union

Business Cycle Synchronization of the Visegrad Four and the European Union

Business Cycle Synchronization in the EMU: Core vs. Periphery

The endogeneity of optimum currency area criteria in the context of financial crisis: Evidence from the time-frequency domain analysis

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