Business cycle convergence in EMU: A second look at the second moment

Crespo Cuaresma, Jesus ORCID: and Fernandez-Amador, Octavio (2013) Business cycle convergence in EMU: A second look at the second moment. Journal of International Money and Finance, 37. pp. 239-259. ISSN 0261-5606


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We analyse the dynamics of the standard deviation of demand and supply shocks as well as of the demand component of GDP across countries in the European Monetary Union (EMU). This analysis allows us to evaluate the patterns of cyclical comovement in EMU and compare them the cyclical performance of the new members of the EU and other OECD countries. We make use of sigma-convergence methods to identify synchronization patterns in business cycles. The Eurozone has converged to a stable lower level of dispersion across business cycles during the end of the 80s and the beginning of the 90s. The new EU members have also experienced a strong pattern of convergence from 1998 to 2005, when a strong divergence trend appears. An enlargement of the EMU to 22 members would not significantly decrease its optimality as a currency area. There is evidence for some Europe-specific characteristics as compared to global comovements in business cycles. (authors' abstract)

Item Type: Article
Additional Information: To see the final version of this paper please visit the publisher's website. Access to the published version may require a subscription. The original publication is available at
Keywords: Business cycle synchronization / Structural VAR / Structural shocks / European Monetary Union
Classification Codes: JEL E32, E63, F02
Divisions: Departments > Volkswirtschaft > Makroökonomie
Version of the Document: Accepted for Publication
Depositing User: ePub Administrator
Date Deposited: 22 Apr 2014 10:07
Last Modified: 02 Dec 2019 09:23
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