The Euro Area Business Cycle: Stylized Facts and Measurement Issues
This book explores different issues on assessing cyclical characteristics of the euro area and its relation with the rest of the world. The chapters cover a broad range of issues: dating the business cycle, measuring the output gap, the role of international variables in predicting the cycle of European countries, the identification of the characteristics of the relation between the euro and the US cycle.
Some of the analysis in this book is methodological and evaluates different econometric techniques for the assessing of turning points in economic activity, measuring the cycle and the timely assessment of the state of the economy. Some of the issues of data uncertainty and real time assessment of economic activity, discussed in the book are part of a very active recent field of research involving both Central Banks, policy institutions and the academic world. The analysis of this book should also help evaluating the robustness of the historical dates for the peaks and troughs of the euro area business cycle recently established by the CEPR Dating Committee.
Some of the analysis is empirical, based on country specific variables, but some is based on euro area aggregate data that have been only recently made available to the research community. Since the euro area, as an aggregate, is still a new economic entity of which very little is known and for which data had to be constructed from controversial aggregation methods, the book is a first step in the direction of building empirical knowledge on this economy. The book offers food for thoughts and should stimulate economic modelling that can account for the differences in cyclical characteristic between the euro area and the US.
