Evaluation of the Business Cycle Synchronisation in Europe
Evaluation of the Business Cycle Synchronisation in Europe

Author(s): Veronika Šulíková, Marianna Siničáková, Ľubica Štiblárová, Slavomíra Šuliková
Subject(s): Supranational / Global Economy, Business Economy / Management, Micro-Economics, Evaluation research
Published by: Masarykova univerzita nakladatelství
Keywords: business cycle; synchronisation; Granger causality; clustering;
Summary/Abstract: The aim of the paper is to evaluate synchronisation in Europe throughout integration process in the European Union and/or the euro area. Gradually we apply Granger causality testing and cluster analysis to identify core and peripheral countries. These two alternative methodological approaches enable us to recognize synchronised countries, countries with rather asymmetric evolution, leading as well as lagging countries. Business cycle evolution is evaluated either through GDP growth or output gap indicators. In line with expectations, French and German business cycle have the most crucial impact on other countries´ cycles. Our findings prove that degree of integration process can lead to higher synchronisation. However there is still significant number of countries which are not synchronised with core countries. This fact complicates application of single monetary policy instruments in the euro area and economic performance in the EU as a whole.

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