IDEAS home Printed from https://ideas.repec.org/a/bas/econst/y2019i3p72-95.html
   My bibliography  Save this article

Are the New Member States Ready to Join the Euro Area? A Business Cycle Perspective

Author

Listed:
  • Kalina Durova

Abstract

The present research employs a vector autoregression (VAR) approach to assess the degree of business cycle synchronization between the new member states (NMS), which have not adopted the single European currency, and the Euro area (EA). The main fiscal and monetary factors affecting the business cycle coordination between the NMS and the EA have been identified. The causality between the business cycle convergence of the NMS and the EA and the implemented fiscal and monetary policies has been investigated in the short and in the long term. Recommendations and conclusions on the readiness of the NMS to join the EA have been made.

Suggested Citation

  • Kalina Durova, 2019. "Are the New Member States Ready to Join the Euro Area? A Business Cycle Perspective," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 72-95.
    • Handle: RePEc:bas:econst:y:2019:i:3:p:72-95
    as

    Download full text from publisher

    File URL: https://www.ceeol.com/search/article-detail?id=793539
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sandra Eickmeier & Joerg Breitung, 2005. "How Synchronized are Central and East European Economies with the Euro Area? Evidence from a Structural Factor model�," TWI Research Paper Series 14, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    2. Todorov Ivan Krumov, 2014. "Macroeconomic Trends in the New Member Countries of the European Union Before the Euro Area Debt Crisis," Scientific Annals of Economics and Business, Sciendo, vol. 61(2), pages 197-217, December.
    3. Fidrmuc, Jarko & Korhonen, Iikka, 2006. "Meta-analysis of the business cycle correlation between the euro area and the CEECs," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 518-537, September.
    4. Nenad Stanisic, 2013. "Convergence between the business cycles of Central and Eastern European countries and the Euro area," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(1), pages 63-74, July.
    5. Zsolt Darvas & Andrew K. Rose & György Szapáry, 2005. "Fiscal Divergence and Business Cycle Synchronization: Irresponsibility is Idiosyncratic," NBER Chapters, in: NBER International Seminar on Macroeconomics 2005, pages 261-298, National Bureau of Economic Research, Inc.
    6. Atanas Damyanov & Galin Stefanov, 2010. "Business Cycle Synchronization Between the Bulgarian Economy and the European Union," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 8(2), pages 171-185.
    7. Mr. Michael Frenkel & Mr. Christiane Nickel, 2002. "How Symmetric Are the Shocks and the Shock Adjustment Dynamics Between the Euro Area and Central and Eastern European Countries?," IMF Working Papers 2002/222, International Monetary Fund.
    8. Andrew Hughes Hallett & Christian R. Richter, 2012. "Are the New Member States Converging on the Euro Area?: A Business Cycle Analysis for Economies in Transition," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2011(2), pages 49-68.
    9. Monica Raileanu Szeles & Nicolae Marinescu, 2010. "Real convergence in the CEECs, euro area accession and the role of Romania," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 7(1), pages 181-202, June.
    10. Brada, Josef C. & Kutan, Ali M. & Zhou, Su, 2005. "Real and monetary convergence between the European Union's core and recent member countries: A rolling cointegration approach," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 249-270, January.
    11. Christos S. Savva & Kyriakos C. Neanidis & Denise R. Osborn, 2010. "Business cycle synchronization of the euro area with the new and negotiating member countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 288-306.
    12. Weimann, Marco, 2003. "OCA theory and EMU Eastern enlargement: An empirical application," Research Notes 8, Deutsche Bank Research.
    13. Matkowski, Z. & Prochniak, M., 2004. "Real Economic Convergence in the EU Accession Countries," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 1(3), pages 5-38.
    14. Marie-José Rinaldi-Larribe, 2008. "Is economic convergence in New Member States sufficient for an adoption of the Euro?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 5(2), pages 269-290, December.
    15. Ivan Todorov, 2013. "The Monetary Integration of the New Member States before the Euro Area Debt Crisis," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 11(4 (Winter), pages 375-390.
    16. Zenon Kontolemis & Kevin Ross, 2005. "Exchange Rate Fluctuations in the New Member States of the European Union," Macroeconomics 0504015, University Library of Munich, Germany.
    17. Fabrizio Carmignani, 2005. "The Characteristics of Business Cycles in Selected European Emerging Market Economies," ECE Discussion Papers Series 2005_7, UNECE.
    18. Eickmeier, Sandra & Breitung, Jörg, 2005. "How synchronized are central and east European economies with the euro area? Evidence from a structural factor model," Discussion Paper Series 1: Economic Studies 2005,20, Deutsche Bundesbank.
    19. Ivan Todorov & Nikolay Patonov, 2012. "A Few Regressions Onbusiness Cycle Synchronization Between Thenew Member States And The Euro Area," Economics and Management, Faculty of Economics, SOUTH-WEST UNIVERSITY "NEOFIT RILSKI", BLAGOEVGRAD, vol. 8(2), pages 9-22.
    20. Ivan Todorov, 2012. "The Euro area membership of Bulgaria in the context of the debt crisis," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzťahov, vol. 10(3), pages 41-52.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ivan Todorov, 2012. "European Economic Integration Theories and Criteria," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 131-152.
    2. Nenad Stanisic, 2013. "Convergence between the business cycles of Central and Eastern European countries and the Euro area," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(1), pages 63-74, July.
    3. David Matesanz Gomez & Guillermo J. Ortega & Benno Torgler, 2012. "Synchronization and Diversity in Business Cycles: A Network Approach Applied to the European Union," CREMA Working Paper Series 2012-01, Center for Research in Economics, Management and the Arts (CREMA).
    4. David Matesanz Gomez & Guillermo J. Ortega & Benno Torgler, 2012. "Synchronization and Diversity in Business Cycles: A Network Approach Applied to the European Union," CREMA Working Paper Series 2012-01, Center for Research in Economics, Management and the Arts (CREMA).
    5. Christos S. Savva & Kyriakos C. Neanidis & Denise R. Osborn, 2010. "Business cycle synchronization of the euro area with the new and negotiating member countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 288-306.
    6. Ivan Todorov & Aleksandar Aleksandrov & Kalina Durova, 2018. "Future Euro Area Membership Of Bulgaria In Terms Of The Business Cycle," Economic Archive, D. A. Tsenov Academy of Economics, Svishtov, Bulgaria, issue 4 Year 20, pages 3-14.
    7. Ahlborn, Markus & Wortmann, Marcus, 2018. "The core‒periphery pattern of European business cycles: A fuzzy clustering approach," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 12-27.
    8. Fidrmuc, Jarko & Korhonen, Iikka, 2006. "Meta-analysis of the business cycle correlation between the euro area and the CEECs," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 518-537, September.
    9. Dinu. Marin & Marinas, Marius Corneliu & Socol Cristian & Socol, Aura Gabriela, 2012. "Clusterization, Persistence, Dependency and Volatility of Business Cycles in an Enlarged Euro Area," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 5-23, June.
    10. Bartosz Maćkowiak, 2006. "How Much of the Macroeconomic Variation in Eastern Europe is Attributable to External Shocks?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 48(3), pages 523-544, September.
    11. Degiannakis, Stavros & Duffy, David & Filis, George & Livada, Alexandra, 2016. "Business cycle synchronisation in EMU: Can fiscal policy bring member-countries closer?," Economic Modelling, Elsevier, vol. 52(PB), pages 551-563.
    12. Pasquale Foresti & Ugo Marani & Giuseppe Piroli, 2015. "Macroeconomic dynamics in four selected new member states of the EU," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 8(1), pages 40-51.
    13. Zuzana Brixiova & Margaret H. Morgan & Andreas Wörgötter, 2010. "On The Road to Euro: How Synchronized Is Estonia with the Euro zone?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 7(1), pages 203-227, June.
    14. Viktor Dinev, 2017. "“Macroeconomic Imbalances” Factor for the Euro Area Debt Crisis," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 142-177.
    15. Sofia Gouveia, 2014. "Business cycle correlation between the Euro area and the Balkan countries," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 7(1), pages 33-49, April.
    16. repec:hum:wpaper:sfb649dp2005-061 is not listed on IDEAS
    17. Kocenda, Evzen & Kutan, Ali M. & Yigit, Taner M., 2008. "Fiscal convergence in the European Union," The North American Journal of Economics and Finance, Elsevier, vol. 19(3), pages 319-330, December.
    18. Sorin Celea & Petre Brezeanu & Ana Petrina Păun, 2013. "Fiscal Discipline within the EU: Comparative Analysis," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 13(2), pages 23-30.
    19. Balázs Égert, 2007. "Real Convergence, Price Level Convergence and Inflation in Europe," Working Papers 267, Bruegel.
    20. Aslanidis, Nektarios, 2007. "Business Cycle Regimes in CEECs Production: A Threshold SURE Approach," Working Papers 2072/5318, Universitat Rovira i Virgili, Department of Economics.
    21. Daniel Stavárek & Lucie Tomanova, 2014. "Is the Region of Visegrad Countries on the Track to the Euro Area? Recent Evidence from the Real Convergence Perspective," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 130-139.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bas:econst:y:2019:i:3:p:72-95. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Diana Dimitrova (email available below). General contact details of provider: https://edirc.repec.org/data/ikbasbg.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.