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External Influences on Business Cycle Synchronization in the Euro Area

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  • Jason Jones
  • Nora Collins
  • Lauren Sribnick

Abstract

Most studies of business cycle synchronization in the EMU identify a core set of counties with high synchronization and a periphery set of countries with low synchronization. Using a structural VAR with model uncertainty, we identify spillover effects from shocks that originate in the United States, the EMU, and the rest of the world to test whether external influences can explain the existence of the core and periphery. Most countries typically found in the core respond to external spillovers in similar ways, leading to more synchronized business cycles. The response to external influences in the countries traditionally found in the periphery, on the other hand, help explain their exclusion from the core. Copyright International Atlantic Economic Society 2012

Suggested Citation

  • Jason Jones & Nora Collins & Lauren Sribnick, 2012. "External Influences on Business Cycle Synchronization in the Euro Area," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(1), pages 28-39, February.
    • Handle: RePEc:kap:iaecre:v:18:y:2012:i:1:p:28-39:10.1007/s11294-011-9339-7
    DOI: 10.1007/s11294-011-9339-7
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