Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212273 
Year of Publication: 
2013
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 33/2013
Publisher: 
Bank of Finland, Helsinki
Abstract: 
While it is painfully clear that the 'ever closer' monetary and financial union in the EU has run into serious trouble there has been very little study of the degree to which the countries have become similar or different in their economic growth dynamics. This paper therefore goes beyond the traditional convergence literature to look at their dynamic convergence and explore the path of their changing similarity in the frequency domain. The results show that while a core group of countries may be developing together, there appears to be at least seven identifiable groups of countries with different growth dynamics. Greece appears to be in a class on its own. Business cycles are important but longer-term trends and higher frequency fluctuations all have a role to play in facilitating adjustment. These results provide awkward implications for policy, particularly for those who thought that simply having a union would draw countries closer together (endogenous OCA criteria).
Subjects: 
Business cycles
growth cycles
frequency domain
wavelet analysis
cluster analysis
euro area
European Union
optimal currency area
JEL: 
C49
E32
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-55-4
Document Type: 
Working Paper

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