Arbeitspapier
Has Integration Promoted Business Cycle Synchronization in the Enlarged EU?
This paper examines whether European integration, manifesting itself in increased trade and FDI linkages, new specializations and economic policy coordination, contributed to the synchronization of business cycles in the enlarged EU. We estimate the effects on bilateral growth rate correlations in 1995-2008 in a simultaneous equations model which permits to model endogenous relationships and unveil direct and indirect effects. Trade and FDI prove to have a strong impact on synchronization, specifically between incumbent and new EU members. More coordinated fiscal policies and, particularly in EU 15, the alignment of monetary policies promoted synchronization. Nevertheless, flexible exchange rates remained important adjustment instruments for the new member states. Increasing manufacturing specialization is not counteracting synchronization. The achieved EU income convergence, a declared objective of EU policy, supported business cycle synchronization.
- Language
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Englisch
- Bibliographic citation
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Series: FIW Working Paper ; No. 75
- Classification
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Wirtschaft
Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
Monetary Policy
Fiscal Policy
Economic Integration
International Policy Coordination and Transmission
International Business Cycles
- Subject
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Business cycles
transmission channel
FDI
trade
monetary union
- Event
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Geistige Schöpfung
- (who)
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Antonakakis, Nikolaos
Tondl, Gabriele
- Event
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Veröffentlichung
- (who)
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FIW - Research Centre International Economics
- (where)
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Vienna
- (when)
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2011
- Handle
- Last update
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10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Antonakakis, Nikolaos
- Tondl, Gabriele
- FIW - Research Centre International Economics
Time of origin
- 2011