Has the Euro changed the business cycle?

• Verfasst von: Enders, Zeno [VerfasserIn]
• Verfasst von: Jung, Philip [VerfasserIn]
• Verfasst von: Müller, Gernot J. [VerfasserIn]
• Titel: Has the Euro changed the business cycle?
• Verf.angabe: Zeno Enders, Philip Jung, Gernot J. Müller
• Jahr: 2013
• Jahr des Originals: 2012
• Umfang: 23 S.
• Fussnoten: Available online 22 December 2012 ; Gesehen am 05.02.2021
• Titel Quelle: Enthalten in: European economic review
• Ort Quelle: Amsterdam : Elsevier, 1969
• Jahr Quelle: 2013
• Band/Heft Quelle: 59(2013), Seite 189-211
• ISSN Quelle: 1873-572X
• DOI: doi:10.1016/j.euroecorev.2012.12.003
• Datenträger: Online-Ressource
• Sprache: eng
• Bibliogr. Hinweis: Erscheint auch als : Druck-Ausgabe: Enders, Zeno: Has the Euro changed the business cycle?. - 2013
• Sach-SW: Cross-country spillovers
• Sach-SW: EMU
• Sach-SW: Euro
• Sach-SW: European business cycles
• Sach-SW: Exchange rate regime
• Sach-SW: Monetary policy
• Sach-SW: Optimum currency area
• K10plus-PPN: 1747632589

Abstract

In contrast to the notion that the exchange-rate regime is non-neutral, there is little evidence that EMU has systematically changed the European business cycle. In fact, we find the volatility of macroeconomic variables largely unchanged before and after the introduction of the Euro. Exceptions are a strong decline in real exchange rate volatility and a considerable increase in cross-country correlations. To account for this finding, we develop a two-country business cycle model which is able to replicate key features of European data. In particular, the model correctly predicts a limited effect of EMU on standard business cycles statistics. However, further analysis reveals that the Euro has changed the nature of the cycle through its impact on the transmission mechanism. Cross-country spillovers have become relatively more, domestic shocks relatively less important in accounting for economic fluctuations under EMU. This explains why there is little change in unconditional volatilities.