Inflation Rate Dynamics Convergence within the Euro

Abstract

Abstract. In this paper we use wavelet analysis to address the problem of inflation dynamics convergence in the Euro area. The study is conducted for the 11 countries that first joined the Euro. We use a dissimilarity measure derived in the time-frequency space to estimate the degree of inflation synchronization among these countries. With this measure, we fill a dissimilarity matrix which, with multidimensional scaling, is then used to plot the different countries in a plane. Our results indicate that the degree of inflation cycles synchronization is much stronger before than after the Euro. For example, while before the Euro, Portuguese inflation is synchronized with the inflation in six other countries, after the Euro adoption any statistical evidence of synchronization disappears.

Business cycle co-movements between renewables consumption and industrial production: A continuous wavelet coherence approach

“…The advantage of wavelet analysis over FT and time series techniques is that wavelet analyses consider time domain as well as frequency domain. The wavelet analysis hence (i) employs spectral analysis of a time series as a function of time and (ii) observes different periodic components of the time series across time [49,50]. The related wavelet analyses can be classified into two main groups; (a) discrete wavelet transform (DWT) and (b) continuous wavelet transform (CWT).…”

Simulation analysis of the degree of inadequacy in the single monetary policy for the EU economy outside the euro zone / Symulacyjna analiza stopnia nieadekwatności jednolitej polityki pieniężnej dla unijnej gospodarki spoza strefy euro

“…The related literature contains many publications which quote the decrease of differences in GDP per capita ( the process of real convergence) and a better and better synchronization of the business cycles as part of the consequences resulting from adoption of the single European currency, but the results of empirical studies do not seem to unequivocally confirm such opinions. Above all, those results indicate that operating inside the euro zone does not guarantee the acceleration of the real convergence [Lopez, Papell 2012;Borsi, Metiu 2013;Soares, Aguiar-Conraria 2014], and, apart from that, the course of business cycles in individual member countries is divergent in many ways [NBP 2009;Barczyk et al 2010;Lee 2013]. Therefore, it seems that a varying effectiveness of the ECB single monetary policy in shaping the macroeconomic stability of the member states can be a derivative of the diversity in their economies [Urbanowicz 2015, p. 13].…”

The Inadequacy of the European Central Bank’s Monetary Policy in the Process of Macroeconomic Stabilization in the Eurozone

“…O ile w literaturze przedmiotu można odnaleźć wiele publikacji, w których proces konwergencji realnej (zmniejszenie różnic w poziomie PKB per capita) oraz coraz większa synchronizacja cykli koniunkturalnych są podawane jako jedne z konsekwencji przyjęcia wspólnej waluty europejskiej, to wyniki badań empirycznych nie dostarczają jednoznacznego potwierdzenia dla tych poglądów. Przede wszystkim wskazują one, że funkcjonowanie wewnątrz strefy euro nie gwarantuje przyspieszenia realnej konwergencji [Lopez, Papell, 2012;Sławiński, 2012;Borsi, Metiu, 2013;Soares, Aguiar-Conraria, 2014], a przebieg cykli koniunkturalnych w poszczególnych krajach członkowskich jest pod wieloma względami rozbieżny [NBP, 2009;Barczyk i in. 2010;Lee, 2013] 18 .…”