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Germany and the European Business Cycle - An Analysis of Causal Relations in an International Real Business Cycle Model

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  • Ferdinand Fichtner

Abstract

This paper studies the role of the German economy for the existence of the so called European business cycle, a term referring to the regularly observed synchronization of the national business cycles in Europe. Using a three-country general equilibrium model, we are able to simulate impulse response functions mimicking the important features observed in the data. Focusing on the importance of shocks affecting the German GDP we show that trade-related transmission from Germany to the other European economies is only of minor importance for the synchronization of national business cycles. On the contrary, our findings suggest that the influence of common shocks and of technology spillovers accounts for most of the parallels in economic performance.

Suggested Citation

  • Ferdinand Fichtner, 2003. "Germany and the European Business Cycle - An Analysis of Causal Relations in an International Real Business Cycle Model," IWP Discussion Paper Series 01/2003, Institute for Economic Policy, Cologne, Germany.
    • Handle: RePEc:kln:iwpdip:dp01/03
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    References listed on IDEAS

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    3. Hallwood, Paul & Marsh, Ian W. & Scheibe, Jorg, 2006. "An assessment of the case for monetary union or official dollarization in five Latin American countries," Emerging Markets Review, Elsevier, vol. 7(1), pages 52-66, March.

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    More about this item

    Keywords

    European business cycle; Transmission; Open economy macroeconomics; Real business cycles;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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