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Some Facts About the Cyclical Convergence in the Euro Zone
E32 - Business Fluctuations; Cycles
In the context of a single currency and a common monetary policy defined by the European Central Bank for the euro area as a whole, it is important to evaluate the degree of business cycle resemblance among the participant countries. We resort to the association and synchronization concepts to define cyclical convergence. Using a time domain approach, we purport to use several parametric and non-parametric statistics to investigate whether the cycles of these countries have converged to the euro area business cycle during the sample period. The results obtained are in line with those from previous studies and suggest that Italy, Spain, Austria, the Netherlands, Portugal and Greece have cyclically converged to the euro area business cycle. Regarding the United Kingdom, the evidence suggests the existence of a strong degree of association with the euro zone, exhibiting however a lead cycle in the more recent period.