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Cyclical synchronization in the EMU along the financial crisis: An interpretation of the conflicting signals

European Journal of Government and Economics

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Field Value
 
Title Cyclical synchronization in the EMU along the financial crisis: An interpretation of the conflicting signals
 
Creator Cancelo, Jose Ramon
 
Subject international business cycles; euro area; cyclical convergence; asymmetric responses
E32; F42; F44
 
Description We analyze how cyclical synchronization in the EMU evolved since the onset of the current financial crisis. The standard measures of cyclical correlation suggest that while the cycle of the euro area became more aligned with the cycles of other developed economies, the EMU itself apparently entered into a phase of cyclical divergence. We show that as a matter of fact the bulk of the member states remained closely aligned, and the seeming decline in synchronization is due to a few countries decoupling from the euro area. Next we present empirical evidence that the foundations that explain the evolution of the national cycles against the EMU aggregate through the crisis were already latent in 2007. Greece and Ireland deviate from the general pattern, the former because of its loose fiscal policy all along the period 2000-2007, and the latter due to the flexibility of its labor market.
 
Publisher Europa Grande
 
Contributor —
 
Date 2012-06-30
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ejge.org/index.php/ejge/article/view/18
 
Source European Journal of Government and Economics; Vol 1, No 1 (2012); 86-100
2254-7088
 
Language eng
 
Relation http://www.ejge.org/index.php/ejge/article/view/18/15
 
Rights Copyright (c) 2012 Jose Ramon Cancelo
http://creativecommons.org/licenses/by/4.0