Business Cycle Synchronization between Germany and Countries Inside and Outside Euro area
2013 (English)Conference paper, Abstract (Other academic)
This paper analyzes the business cycle synchronization across European economies inside and outside the euro. Our objective is to test whether there are any differences between the synchronization between Germany and other European countries that are either in the euro area or outside the euro area. We study the synchronization with France, Finland, Italy, Denmark, Norway, Sweden and UK,
Business cycle synchronization can be studied in either the time domain or in the frequency domain. The results can be sensitive to the frequency of observations, i.e. quarterly or yearly data. On the other hand studies in the frequency domain is not always easy to translate into a time domain that corresponds with lead and lags associated with economic policy and investment decisions.
We use a wavelet-based measure of comovement which makes it possible to find a balance between the time and the frequency domain features of the data and, which constitutes a refinement to previous approaches. The wavelet measure of cohesion allows us to assess how synchronization evolves over time and across frequencies simultaneously. We find that the strength of comovement of business cycles differ among countries and changes over the time horizon.
Place, publisher, year, edition, pages
Business Cycle Synchronization, Continuous wavelet transformation, European Union Integration.
IdentifiersURN: urn:nbn:se:liu:diva-90046OAI: oai:DiVA.org:liu-90046DiVA: diva2:611803
Swedish Network for European Studies in Economics and Business (SNEE), Mölle, Sweden, Maj 22-24, 2013