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Coherence of the business cycles of prospective members of the euro area and the euro area business cycle

Author

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  • Haan, Jakob de
  • Jacobs, Jan P.A.M.
  • Zijm, Renske

Abstract

Is it beneficial for Central and Eastern European EU Member States to join the euro area? To answer that question, the coherence of the business cycles of six EU Member States and the euro area is analyzed. These countries recently joined (Croatia) or are supposed to join the euro area in the (near) future. The analysis utilizes the synchronicity and similarity measures proposed by Mink et al. (2012). Whereas the synchronicity measure captures whether output gaps have the same sign, the similarity measure identifies differences in cycle amplitudes. It is observed that the business cycles of several countries, notably Romania and Hungary, are out of sync with that of the euro area. The output gap similarity and synchronicity measures for Croatia are also fairly low. However, this also holds for some countries in the euro area.

Suggested Citation

  • Haan, Jakob de & Jacobs, Jan P.A.M. & Zijm, Renske, 2024. "Coherence of the business cycles of prospective members of the euro area and the euro area business cycle," Economic Systems, Elsevier, vol. 48(4).
    • Handle: RePEc:eee:ecosys:v:48:y:2024:i:4:s0939362524000438
    DOI: 10.1016/j.ecosys.2024.101221
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    More about this item

    Keywords

    Business cycle coherence; Synchronization; Output gaps; Euro area enlargement;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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