Business cycle synchronisation in a currency union : Taking stock of the evidence
| Title: | Business cycle synchronisation in a currency union : Taking stock of the evidence |
| Author: | Campos, Nauro F. ; Fidrmuc, Jarko ; Korhonen, Iikka |
| Organization: | Bank of Finland |
| Series: | Bank of Finland Research Discussion Papers |
| Series number: | 28/2017 |
| Year of publication: | 2017 |
| Publication date: | 20.9.2017 |
| Published in: | Published in International Review of Financial Analysis 61 ; January ; 2019 https://doi.org/10.1016/j.irfa.2018.11.012 |
| Pages: | 62 |
| Subject (yso): | euro |
| Keywords: | EMU; valuuttaunionit; suhdanteet; synkronisaatio; Eurooppa; optimaalinen valuutta-alue |
| JEL: | E32; F42 |
| Other keywords: | business cycles synchronisation; optimum currency areas; EMU; euro; meta-analysis |
| Abstract: | This paper offers a first systematic evaluation of the evidence on the effects of currency unions on the synchronisation of economic activity. Focusing on Europe, we construct a database of about 3,000 business cycle synchronisation coefficients as well as their design and estimation characteristics. We find that: (1) synchronisation increased from about 0.4 before the introduction of the euro in 1999 to 0.6 afterwards; (2) this increase occurred in both euro and non-euro countries (larger in former); (3) there is evidence of country-specific publication bias; (4) our difference-in-differences estimates suggest the euro accounted for approximately half of the observed increase in synchronisation. |
| Rights: | https://helda.helsinki.fi/bof/copyright |
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