Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/212520
Authors: 
Fidrmuc, Jarko
Korhonen, Iikka
Year of Publication: 
2003
Series/Report no.: 
BOFIT Discussion Papers No. 6/2003
Abstract: 
We assess the correlation of supply and demand shocks between current countries in the euro area and EU accession candidates from 1993/1995 to 2002.Supply and demand shocks are recovered from estimated structural VAR models of output growth and inflation. Notably, the economic slowdown between 2000 and 2002 increased heterogeneity of business cycles between the euro area and acceding counties.We find that several acceding countries have a quite high correlation of underlying shocks with the euro area and conclude that continuing integration within the EU is likely to align the business cycles of these countries in a manner similar to the synchronisation of supply and demand shocks we document for the EU in the 1990s.
Subjects: 
Optimum currency area
EU enlargement
structural VAR
JEL: 
E32
F42
Persistent Identifier of the first edition: 
ISBN: 
951-686-860-6
Document Type: 
Working Paper

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