Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212094 
Year of Publication: 
2008
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 3/2008
Publisher: 
Bank of Finland, Helsinki
Abstract: 
Optimal currency area theory suggests that business cycle co-movement is a sufficient condition for monetary union, particularly if there are low levels of labour mobility between potential members of the monetary union. Previous studies of co-movement of business cycle variables found that there was a core of member states in the EU that could be grouped together as having similar business cycle co-movements, but these studies have always used Germany as the country against which to compare. This study updates and extends corresponding previous analyses. More specifically, it correlates the countries against both German and euro area macroeconomic aggregates and uses more recent techniques in cluster analysis, namely model-based clustering techniques.
Subjects: 
business cycles
co-movement
optimal currency areas
model-based cluster analysis
JEL: 
F15
F31
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-421-3
Document Type: 
Working Paper

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