Business Cycle Synchronization in the Enlarged EU
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This paper analyzes the synchronization of business cycles between new and old EU members using various measures. The main findings are that Hungary, Poland and Slovenia have achieved high degree of synchronization for GDP, industry and exports, but not for consumption and services. The other CEECs have achieved less or no synchronization. There has been significant increase in synchronization of GDP and its major components within EMU. This lends support to the argument of OCA endogeneity but there is also evidence of a world cycle. The consumption-correlation puzzle remains, but its magnitude has greatly diminished in the EMU members.
KeywordsBusiness cycle synchronization Consumption-correlation puzzle EMU New EU members OCA endogeneity
JEL ClassificationE32 F41
We are thankful for comments and discussions to Michael Artis, Péter Benczúr, Luís Campos e Cunha, Yuliya Demyanyk, Domenico Giannone, Max Gillman, Daniel Gros, Jürgen von Hagen, Eduard Hochreiter, Sebnem Kalemli-Ozcan, Sylvia Kaufmann, Ayhan Kose, Lucrezia Reichlin, Andrew Rose, Pierre Siklos, George Tavlas, an anonymous referee and conference and workshop participants at the ASSA 2004 Annual Meetings (San Diego), Magyar Nemzeti Bank (Budapest), Euro Area Business Cycle Network Workshop (Vienna), European University Institute (Florence), Austrian Economic Association (Vienna), Central European University (Budapest), Fourth Annual VRCME at Laurier Conference (Lisbon), and ECB-IMF joint workshop (Frankfurt am Main). The authors are responsible for any errors.
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