Work detail

Determinants of business cycle synchronization

Author: Bc. Petra Horáčková
Year: 2012 - summer
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Work type: Bachelors
Language: Czech
Pages: 115
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Abstract: This paper focuses on issue of business cycle synchronization. Survey of litera-
ture on the optimal currency area theory reviews the development of business cycle
synchronization analysis over the past decades till nowadays. Main ndings of sev-
eral empirical studies are summarized. Findings of dierent analysis are often not
consistent. This paper discusses main methods of isolation of cyclical component
from time series and examines business cycle correlation using GDP and industrial
production data of thirty countries. There is some evidence, that business cycle
synchronization has increased compared to period 1995Q1-2003Q2. Some impact
of the 2009-2011 world economic crisis has also been conrmed. Possible determi-
nants of the business cycle synchronization in the European Union are examined
subsequently. According to the results, specialization of industry and membership
in monetary union are found to be the leading factors of the business cycle syn-
chronization in the European Union. Positive role of bilateral trade has also been
conrmed.
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