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Business cycle synchronization within the European Union: A wavelet cohesion approach

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  • Lubos Hanus
  • Lukas Vacha

Abstract

In this paper, we map the process of business cycle synchronization across the European Union. We study this synchronization by applying wavelet techniques, particularly the cohesion measure with time-varying weights. This novel approach allows us to study the dynamic relationship among selected countries from a different perspective than the usual time-domain models. Analyzing monthly data from 1990 to 2014, we show an increasing co-movement of the Visegrad countries with the European Union after the countries began preparing for the accession to the European Union. With particular focus on the Visegrad countries we show that participation in a currency union possibly increases the co-movement. Furthermore, we find a high degree of synchronization in long-term horizons by analyzing the Visegrad Four and Southern European countries' synchronization with the core countries of the European Union.

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  • Lubos Hanus & Lukas Vacha, 2015. "Business cycle synchronization within the European Union: A wavelet cohesion approach," Papers 1506.03106, arXiv.org, revised Feb 2016.
    • Handle: RePEc:arx:papers:1506.03106
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    References listed on IDEAS

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    Cited by:

    1. Esashi, Kunihiko & Onozaki, Tamotsu & Saiki, Yoshitaka & Sato, Yuzuru, 2018. "Intermittent transition between synchronization and desynchronization in multi-regional business cycles," Structural Change and Economic Dynamics, Elsevier, vol. 44(C), pages 68-76.
    2. Alain Raybaut, 2018. "Coupling and synchronization dynamics in endogenous business cycles models," Post-Print halshs-01941339, HAL.
    3. Tamotsu Onozaki, 2018. "Nonlinearity, Bounded Rationality, and Heterogeneity," Springer Books, Springer, number 978-4-431-54971-0, December.

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