Citation

Discussion Paper Details

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Title: Are European Business Cycles Close Enough to be Just One?

Author(s): Maximo Camacho, Gabriel P�rez-Quir�s and Lorena S�iz Matute

Publication Date: January 2005

Keyword(s): business cycle synchronization, cluster analysis, economic integration, european union enlargement and multidimensional scaling

Programme Area(s): International Macroeconomics

Abstract: We propose a comprehensive methodology to characterize the business cycle comovements across European economies and some industrialized countries, always trying to ?let the data speak?. Out of this framework, we propose a novel method to show that there is no ?Euro economy? that acts as an attractor to the other economies of the area. We show that the relative comovements across EU economies are prior to the establishment of the Monetary Union. We are able to explain an important proportion of the distances across their business cycles using macro-variables related to the structure of the economy, to the directions of trade, and to the size of the public sector. Finally, we show that the distances across countries that belong to the European Union are smaller than the distances across newcomers.

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Bibliographic Reference

Camacho, M, P�rez-Quir�s, G and S�iz Matute, L. 2005. 'Are European Business Cycles Close Enough to be Just One?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4824