Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267572 
Authors: 
Year of Publication: 
2019
Citation: 
[Journal:] Baltic Journal of Economics [ISSN:] 2334-4385 [Volume:] 19 [Issue:] 2 [Publisher:] Taylor & Francis [Place:] London [Year:] 2019 [Pages:] 248-275
Publisher: 
Taylor & Francis, London
Abstract: 
The last twenty years have brought a bulk of inconsistent results on the determinants of business cycle synchronization (BCS). Researchers have usually focused their attention on a limited set of possible determinants, not accounting for model uncertainty. For these reasons, Bayesian Model Averaging has been applied in this paper to the dataset with 43 potential determinants of BCS for the EU. There is strong evidence to claim that migration, exchange rate variability, similarity of production structures, TFP shocks, similarity in exchange rate policy, intra-industry trade, risk sharing, and capital mobility are robust determinants of BCS. Some well-established determinants such as bilateral trade, monetary policy similarity, gravity variables, and participation in a monetary union and free trade area have turned out to be fragile. The structure of trade is more important for BCS than its magnitude, as intra-industry trade and structural similarity are taking explanatory power away from the bilateral trade.
Subjects: 
Bayesian model averaging
Business cycle synchronization
jointness measures
monetary union
optimum currency areas
the European Union
JEL: 
C11
F15
F41
F44
F45
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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