Do political events aect business cycles? The Maastricht treaty, the creation of the ECB and the euro economy� (original) (raw)

Did the Maastricht treaty or the ECB creation alter the European business cycle?

2008

This paper provides some evidence on the effect of two crucial institutions of the European Monetary Union, i.e. the Maastricht treaty and the creation of the ECB, on the dynamics of the European business cycles. With a panel VAR approach and 1970Q1-2007Q3 data for ten European countries, including the main Euroarea ones and the UK, Sweden and Denmark, the paper shows that: (i) an EU-wide cycle emerges clearly in the 1990s, common to EMU and non-EMU countries; (ii) the national cycles see their volatility decrease, their persistence change and their correlation with the common cycle increase over time, but not necessarily at the dates of the two institutional changes; (iii) in an out-of-sample forecasting sense, neither single event made a huge difference of European business cycles.

Do institutional changes affect business cycles? Evidence from Europe

Journal of Economic Dynamics and Control, 2012

We study the effects that the Maastricht Treaty, the creation of the ECB, and the Euro changeover had on the dynamics of European business cycles using a panel VAR and data from 10 European countries-seven from the Euro area and three outside of it. There are changes in the features of European business cycles and in the transmission of shocks. They precede the three events of interest and are more linked to a general process of European convergence and synchronization.

Domestic and international influences on business cycle regimes in Europe

International Journal of …, 2004

This paper examines the roles of domestic and international variables in predicting classical business cycle regimes in Germany, France, Italy and the UK over the period 1970 to 2001. Regimes are examined as binary variables representing expansions versus recessions. A range of domestic real and financial variables are initially used as leading indicators, with these variables predicting regimes in Germany reasonably well at during the in-sample period to 1996, followed (in order) by the UK, Italy and France. Consideration of foreign variables leads to important roles for the composite leading indicators and interest rates of the US and Germany. The relative importance of these variables differs over countries, but overall they underline the role of international influences in the business cycles of these European countries. Postsample forecasts are examined, with the international model for Germany correctly indicating recession during 2001. JEL classification: C22, E32, E37, E40.

Comparisons of Business Cycles in the EC: Idiosyncracies and Regularities

Economica, 1995

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. This paper compares the business cycle features of the EC economies using quarterly and annual data since 1960 and the Real Business Cycle model as a guidance. The evidence suggests that there are remarkable similarities between the business cycle pattern of these countries, despite significant differences in the patterns of fiscal and monetary policies and the terms of trade. We take this evidence to suggest that the type of shocks and the propagation mechanism is fairly similar across the EC countries. Hence the process of European integration under a set of uniform institutions and policies should not be a problem as far as the business cycle is concerned.

Correlation of Business Cycles in the Euro Zone

2007

In this short article we use a simple diferences-in-diferences technique to investigate whether bilateral correlation of business cycles increased more amongst members of the European Monetary Union (EMU) after the implementation of the Euro than amidst other OECD economies. We present evidence suggesting this to be the case. Importantly, this higher correlations appear to be the result of the common monetary policy per se, and not of higher bilateral trade.

Business Cycle Dynamics in the CEE Countries: A Political Economy Approach

2010

This paper uses a simple VAR analysis to examine 5 CEE countries (the Czech Republic, Hungary, Poland, Romania and Slovakia) in order to understand whether their business cycles are synchronized with each other and/or with the major economies that they are supposed to be linked with, namely the US, Germany and Russia. We find that there are differences across the CEE countries themselves and that there is no common CEE business cycle. Comparing the individual CEE business cycles with those of the dominant economies, we find that Hungary and Poland are related to the US business cycle, reflecting the fact that they are more integrated with the global economy, whereas Slovakia is closer to the Russian cycle. Finally, splitting the sample into the late 1990s and 2000s due to the transition nature of these economies in the former period shows that the influence of Russia on the CEE economies has declined over time. However, in contrast to the expectations that CEE countries are likely to be affected by Germany in the second half of the sample due to EU negotiations followed by full membership, among the CEE countries only the business cycle of Slovakia is synchronized with that of Germany. On the other hand the Czech Republic, Hungary and Poland are synchronized with the US business cycle, showing that globalization has decreased the importance of distance.