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Business cycle coherence and OCA endogeneity testing during the integration period in the European Union

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  • Nikola Najman

    (Research Centre, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

  • Petr Rozmahel

    (Research Centre, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

Abstract

The paper deals with assessing the EU from the new optimum currency area theory perspective. It focuses on measuring of the business cycle coherence applying the composite indicators of output gap similarity and synchronicity. Static as well as dynamic business cycle analysis is applied in the paper. In addition, the OCA endogeneity hypothesis is tested based on results of the business cycle coherence analysis. The results show high general coherence of the business cycles across the EU countries in terms of synchronicity measures. Detailed analysis of the output gap similarity indicates differences in the scale of cyclical deviations and impact of shocks in individual countries in the EU. Also the ability to cope with the crisis as a kind of external shock differs in the EU countries. The results do not provide a clear evidence of the OCA endogeneity hypothesis related to the Euro area member and non-member countries.

Suggested Citation

  • Nikola Najman & Petr Rozmahel, 2013. "Business cycle coherence and OCA endogeneity testing during the integration period in the European Union," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(4), pages 1033-1040.
    • Handle: RePEc:mup:actaun:actaun_2013061041033
    DOI: 10.11118/actaun201361041033
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    Cited by:

    1. Václav Adamec, 2018. "Synchronization of Economic Cycles in Countries of the Visegrad Group, Germany and Eurozone," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 66(3), pages 719-728.

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