Trade Integration and Business Cycle Synchronization in the EMU: The Negative Effect of New Trade Flows

Pentecôte, Jean-Sébastien; Poutineau, Jean‐Christophe; Rondeau, Fabien

doi:10.1007/s11079-014-9318-8

Cited by 15 publications

(8 citation statements)

References 42 publications

(31 reference statements)

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“…Trade intensity is 0 in case of no trade between the examined countries, value 1 is achieved if both countries in a pair trade exclusively with each other. In line with Frankel and Rose (1998); Inklaar et al (2008); Pentecôte et al (2015), we expected a positive effect of trade intensity on business cycle similarity as trade intensity boosts economic output in both economies and deepens their level of economic integration, thereby, affecting business cycle synchronization. Intra-industry trade is also expected as a driver of business cycle similarity as suggested by Fidrmuc (2004).…”

Section: Explanatory Variablessupporting

confidence: 77%

The Effect of Fiscal Policy Asymmetries on Business Cycle Correlation in the EU

Grochová

Rozmahel

Litzman

2022

Sci. Ann. Econ. Bus.

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This paper reviews the role of bilateral fiscal differences, fiscal indiscipline and their joint effects in particular in determining business cycle synchronicity in the European Union (EU). Panel data comprising 28 EU members from 1999–2019 are used in the analysis. The two-step Instrumental Variable–Generalized Method of Moments (IV–GMM) is employed to estimate the effects of examined fiscal measures on business cycle correlations. The study finds that fiscal indiscipline doubles the negative effect of increasing fiscal differences on business cycle correlation compared to fiscally disciplined country-pairs. The findings suggest reopening the debate on fiscal policy coordination across Europe.

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Section: Explanatory Variablessupporting

confidence: 77%

The Effect of Fiscal Policy Asymmetries on Business Cycle Correlation in the EU

Grochová

Rozmahel

Litzman

2022

Sci. Ann. Econ. Bus.

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“…With the rapid growth of global trade, barriers to the free flow of goods, services, financial assets, and human capital are lowered, and the linkage of global financial markets is becoming stronger [36]. Pentecôte et al [37] indicate that international trade greatly impacts the linkage between markets. Another view is that economic fundamentals cannot fully explain the stock market linkage.…”

Section: Literature Reviewmentioning

confidence: 99%

Dynamic Spillover Effects of Investor Sentiment and Return between China and the United States

Zhang

Lin

Meng

et al. 2021

Discrete Dynamics in Nature and Society

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As the two largest economies in the world, the investor sentiment and stock return of China and the United States are the focus of global attention. In this paper, we study the dynamic spillover effects of investor sentiment and return between China and the United States. First, we use the relative price differences of 9 dual-listed companies in China and the United States simultaneously to verify whether investor sentiment affects stock returns. We find a significant positive correlation between the relative price difference of dual-listed companies and the difference of investor sentiment, indicating that the investor sentiment index indeed affects stock prices. Next, we construct the TVP-VAR model to study the dynamic spillover effects of investor sentiment and the return between China and the United States. Through the time-varying impulse response, we find investor sentiment has a significant dynamic impact on returns. Therefore, investment sentiment contagion and stock market linkage between China and the United States are obvious. In addition, we conduct various robust tests, and all results are consistent.

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“…They argue that the impact on trade flows is at best only as a first approximation of the possible gains arising from the euro. The reason is that creation of trade does not bring a welfare in itself, but rather a channel through which different types of microeconomic gains can materialize (Pentecôte et al, 2015). Thus, the economic integration fosters lower prices and a higher average productivity.…”

Section:    mentioning

confidence: 99%

The Effects of Entering the Eurozone on other Central and Eastern European Countries in Relation to Poland

Heller¹,

Warżała²

2019

JOC

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The aim of the article is to compare the major economic indicators relatively new EU members Estonia, Latvia, Lithuania, Slovakia, Slovenia who have joined the Eurozone with Polish macroeconomic indicators. The results also reflect economic changes that took place in these countries after joining the Eurozone in the context of economic convergence as well as competitiveness. The analysis is based on Eurostat data and encompasses the period of 2005-2017. In order to verify the process of economic convergence among these Central and Eastern European countries and the EU 12, both the hypotheses of absolute β-convergence and σ-convergence were verified. To this end, suitable econometric equations were formulated, and comparative analyses were carried out. The results obtained demonstrate that the position of countries after joining the Eurozone varies from nation to nation. Latvia and Lithuania joined the Euro only a few years ago (2014 and 2015, respectively), thus the long term effects are not yet clear. In the other countries researched, however, macroeconomic indicators of stabilization can be observed after their entrance into the Eurozone. In this context, Poland's economy also seems to be stable, although it remains out of the Eurozone. All the countries researched appear to have experienced growing β-and σ-convergence with the European Union core (EU 12).

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Trade Integration and Business Cycle Synchronization in the EMU: The Negative Effect of New Trade Flows

Abstract: Hoche CS 86514, 35065 Rennes Cedex, France. We would like to thank Nathalie Colombier for helpful assistance.We are also grateful to Angela Cheptea, Valérie Mignon and Daniel Mirza.

Cited by 15 publications

References 42 publications

The Effect of Fiscal Policy Asymmetries on Business Cycle Correlation in the EU

The Effect of Fiscal Policy Asymmetries on Business Cycle Correlation in the EU

Dynamic Spillover Effects of Investor Sentiment and Return between China and the United States

The Effects of Entering the Eurozone on other Central and Eastern European Countries in Relation to Poland

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