Register  |  Login  |  Inquiries  |  Sitemap
Advanced Search
Journal of Economic Integration 2013 March;28(1) :85-107.
DOI: https://doi.org/10.11130/jei.2013.28.1.85
Trade Integration and Business Cycle Synchronization in the Euro Area: The Case of Southern European Countries
Sofia Gouveia and 
Leonida Correia 
University of Trás-os-Montes and Alto Douro (UTAD), Vila Real, Portugal
Corresponding Author: Sofia Gouveia ,Tel: +351 259350725, Email: sgouveia@utad.pt.
Copyright ©2013 Journal of Economic Integration
ABSTRACT
This paper examines synchronization in the euro area and the role of intra-EMU trade from 1981 to 2011, focusing in particular on southern European countries. The results indicate that the intensification of synchronisation that occurred in the nineties across almost all countries could partially be explained by the increase in trade, which has been strengthened since the start of the run-up to the EMU. For southern European economies, the results are mixed. We find also that trade imbalances have grown over time, becoming more evident in the common currency period. Furthermore, we document a positive and significant relationship between intra-EMU trade linkages and cyclical correlations.

JEL Classification
E32: Business Fluctuations; Cycles
F15: Economic Integration
F41: Open Economy Macroeconomics
Keywords: Business Cycle | Synchronisation | Trade | European Integration | Southern Europe
 
REFERENCE
1. Abbott, A., Joshy, E., Xing, E. (2008) Trade integration and Business cycle Convergence: Is the Relation Robust across Time and Space? Scandinavian Journal of Economics, 110 (2), 403-417
2. Antonakakis, N., Tondl, G. (2011) Has Integration Promoted Business Cycle Synchronization in the Enlarged EU? FIW Working Paper series, 75, FIW
3. Baxter, M., Kouparitsas, M. (2005) Determinants of Business Cycle Comovement: a robust analysis, Journal of Monetary Economics, 52(1), 113-57
4. Baxter, M., King, R. (1999) Measuring Business Cycles: Approximate Band-Pass Filters for Economic Time Series, Review of Economics and Statistics, 81, 575-93
5. Berger, H., Nitsch, V. (2008) Zooming out: The trade effect of the euro in historical perspective, Journal of International Money and Finance, 27(8), 1244-1260
6. Canova, F. (1998) Detrending and Business Cycle Facts, Journal of Monetary Economics, 41, 475-512
7. Cerqueira, P., Martins, R. (2009) Measuring the determinants of business cycle synchronization using a panel approach, Economic Letters, 102(1), 106-108
8. Clark, T., van Wincoop, E. (2001) Borders and business cycles, Journal of International Economics, 55, 59-85
9. Croux, C., Forni, M., Reichlin, L. (2001) A Measure for Comovement of Economic Variables: Theory and Empirics, The Review of Economics and Statistics, 83, 232-41
10. Darvas, Z., Rose, A., Szapáry, G. (2007) Fiscal divergence and business cycle synchronization: Irresponsibility is idiosyncratic, in NBER International Seminar on Macroeconomics 2005 (Ed.) J. Frankel, Pissarides, C., MIT Press, Cambridge, pp. 261-98
11. De Haan, J., Inklaar R., Jong-A-Pin, R. (2008) Will business cycles in the euro area converge? A critical survey of empirical research, Journal of Economic Surveys, 22, 234-273
12. Dées, S., Zorell, N. (2011) Business Cycle Synchronisation – Disentangling Trade and Financial Linkages, ECB Working Paper Series 1322
13. Frankel, J., Rose, A. (1998) The Endogeneity of the Optimum Currency Area Criteria, Economic Journal, 108, 1009-1025
14. Furceri, D., Karras, G. (2008) Business-Cycle Synchronization in EMU, Applied Economics, 40 (12), 1491-1501
15. Giannone, D., Lenza M., Reichlin L. (2009) Business Cycles in the Euro Area, ECB Working Paper Series 1010
16. Hodrick, R., Prescott, E. (1997) Postwar U.S. Business Cycles: An Empirical Investigation, Journal of Money Credit and Banking, 29, 1-16
17. Imbs, J. (2004) Trade, Finance, Specialization and Synchronization, Review of Economics and Statistics, 86, 723-34
18. Imbs, J. (2006) The Real Effects of Financial Integration, Journal of International Economics, 68, 296-324
19. Kenen, P. (1969) The Theory of Optimum Currency Areas: An Eclectic View, in Monetary Problems of the International Economy (Ed.) Mundell, R., Swoboda, A. K. University of Chicago Press, Chicago, pp. 41-60
20. Krugman, P. (1993) Lessons from Massachusetts for EMU, in Adjustment and Growth in the European Union (Ed.) Torres, F., Giavazzi, F., Cambridge University Press, Cambridge, pp. 241-60
21. McKinnon, R. (1963) Optimum Currency Areas, The American Economic Review, 53, 717-25
22. Mundell, R. (1961) A Theory of Optimum Currency Areas, The American Economic Review, 51, 657-65
23. Rose, A.K. (2008) EMU, Trade and Business Cycle Synchronization. University of California, Berkeley working paper, mimeo
24. Siedschlag, I. (2010) Patterns and determinants of business cycle synchronization in the enlarged European Economic and Monetary Union, Eastern Journal of European Studies, 1(1), 21-44
25. Silva, J., Tenreyro, S. (2010) Currencies Unions in Prospect and Retrospect, Annual Review of Economics, 2, 51-74
26. Stock, J., Watson, M. (1998) Business Cycle Flutuations in U. S. Macroeconomics Time Series, NBER 6528
27. Weyerstrass, K., van Aarle, B., Kappler M., Seymen, A. (2009) Business Cycle Synchronization with(in) the Euro Area: in search of a ‘Euro Effect, Open Econ Rev (published online: 3 September 2009, DOI 10.10077s11079-009-9131-y)
Editorial Office
Center for Economic Integration, Sejong Institution, Sejong University, 209, Neungdong-Ro, Gwangjin-Gu,
Seoul, 05006, Korea
TEL : +82-2-3408-3338    FAX : +82-2-3408-3338   E-mail : jei@sejong.ac.kr
Browse Articles |  Current Issue |  For Authors and Reviewers |  About
Copyright© by Center for Economic Integration. All right reserved.