Business cycle convergence in the Euro Area after 20 years of single currency

• Autor(a) principal: Strohschneider, Valentina
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/148038
• topic: Euro Area; Convergence analysis; Business cycle; Optimum currency area; Domínio/Área Científica::Ciências Sociais

This paper aims to provide new evidence on the convergence of business cycles in the euro area after two decades of common currency and to assess the extent and necessity of the fulfilment of the OCA criteria. A correlation analysis is conducted to investigate convergence of business cycles in the euro zone. Findings show no dominant up-or downward trend in synchronisation after 20 years of common currency. Nevertheless, the recurrent pattern of increasing convergence in crisis times and desynchronisation in early recovery periods persists in the analysis. Further, the OCA criteria are assessed. While the conditions of openness to trade and production diversification are largely met in the euro area, the homogeneity of preferences is only partly given. Labour market rigidities and the lack of a common fiscal capacity are the biggest hurdles for the euro zone. Solidarity between member states plays a big role in fiscal integration. Prior research on driving factors of convergence underlines the importance of the OCA criteria for business cycleconvergence in the euro area.