, Volume 38, Issue 2, pp 203–221 | Cite as

Regional output growth synchronisation with the Euro Area

Original Paper


This paper investigates the patterns and determinants of the co-movement of economic activity between regions in the European Union and the Euro Area. We use a panel dataset of 208 regions over the period 1989–2002 and estimate a system of simultaneous equations to analyse the impact of regional trade integration, industry specialisation and exchange rate volatility on regional output growth synchronisation with the Euro Area. We find that deeper trade integration with the Euro Area had a strong direct positive effect on the synchronisation of regional output growth with the Euro Area. Industrial specialisation and exchange rate volatility were sources of cyclical divergence. Industrial specialisation had however an indirect positive effect on regional output growth synchronisation via its positive effect on trade integration, while exchange rate volatility had an indirect additional negative effect on regional output growth synchronisation by reducing trade integration.


European economic and monetary union Business cycles Regional growth 

JEL Classification

E32 F33 F42 



We thank Ray Barrell, Fritz Breuss, David Bell, Xiaoheng Zhang, Konstantinos Angeloupoulos, two anonymous referees and participants at the Congress of the European Regional Science Association in Amsterdam, the Irish Economics Association Conference in Bunclody, the EUROFRAME Conference in Berlin, and the European Trade Study Group Conference in Vienna for helpful comments and suggestions. Iulia Siedschlag gratefully acknowledges financial support from the 5th RTD Framework Programme of the European Communities (Contract No. HPSE-CT-2002-00118).


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Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  1. 1.The Economic and Social Research InstituteDublinIreland
  2. 2.Research Institute For European AffairsVienna University of Economics and BusinessViennaAustria

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