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Business cycle synchronicity, amplitude and the euro: one size does not yet fit all

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  • Wälti, Sébastien
Abstract
This paper focuses on the impact of the euro on the degree of business cycle synchronisation between nineteen advanced economies over the period 1980-2008. In contrast with the existing evidence based on correlation coefficients, we assess the impact of the euro on the synchronicity and the relative amplitude of business cycles separately. We find that although the introduction of the euro has raised the likelihood of business cycle synchronicity, it has not affected the relative amplitude of business cycles. Hence, the common monetary policy has become increasingly suitable for members in terms of the needed direction of policy moves, but not in terms of the required magnitude of these moves.

Suggested Citation

  • Wälti, Sébastien, 2009. "Business cycle synchronicity, amplitude and the euro: one size does not yet fit all," MPRA Paper 21065, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:21065
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    euro; monetary union; business cycle; synchronisation; probit;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • 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
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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