Skip to main content
SpringerLink
Log in
Book cover

Mathematics Without Boundaries pp 447–469Cite as

Business Cycle Convergence: A Survey of Methods and Models

  • Chapter
  • First Online:

  • 1032 Accesses

Abstract

This survey provides an up-to-date summary of the literature that relates to the study of business cycle synchronization. Various paths have been followed through time in empirically testing business cycle co-movement and different data sets have been explored so that to date consensus still dissolves. These studies fall into two major categories: those dealing with the existence of business cycle convergence and the ones trying to identify the macroeconomic variables that induce the co-movement patterns. With respect to the first category and despite the varying empirical results, the majority of studies present evidence in favor of macroeconomic convergence in certain country groups, e.g., the members of the EMU and the US states. Regarding the second category of studies, most authors provide evidence that designates the intensity of trade as a robust factor that induces convergence. We classify the literature into groups depending on the methodology followed in order to provide to the reader a consistent and comprehensive guide. Moreover, we contribute to the existing literature by presenting a novel methodology for analyzing business cycle convergence patterns using tools from Graph Theory and the Minimum Dominating Set technique.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

References

  1. Aguiar, C.L., Soares, J.M.: Business cycle synchronization and the Euro: a wavelet analysis. J. Macroecon. 33, 477–489 (2011)

    Article  Google Scholar 

  2. Altavilla, C.: Do EMU members share the same business cycle? J. Common Mark. Stud. 42, 869–896 (2004)

    Article  Google Scholar 

  3. Antonakakis, N.: Business cycle synchronization during US recessions since the beginning of the 1870’s. Econ. Lett. 117, 467–472 (2012)

    Article  Google Scholar 

  4. Artis, M.J., Zhang, W.: International business cycles and the ERM: is there a European business cycle? Int. J. Financ. Econ. 2, 1–16 (1997)

    Article  Google Scholar 

  5. Artis, M.J., Zhang, W.: Further evidence on the international business cycle and the ERM: is there a European business cycle? Oxf. Econ. Pap. 51, 120–132 (1999)

    Article  Google Scholar 

  6. Artis, M.J., Krolzig, H.M., Toro, J.: The European business cycle. Oxf. Econ. Pap. 56, 1–44 (2004)

    Article  Google Scholar 

  7. Backus, D., Kehoe, P.J., Kydland, F.E.: International business cycles: theory and evidence. Natl. Bur. Econ. Res. WP4493 (1993)

    Google Scholar 

  8. Baxter M., King R.G.: Measuring business-cycles: approximate band-pass filters for economic time series. Natl. Bur. Econ. Res. WP5022 (1993)

    Google Scholar 

  9. Baxter, M., Kouparitsas, M.A.: Determinants of business cycle comovement: a robust analysis. J. Monet. Econ. 52, 113–157 (2005)

    Article  Google Scholar 

  10. Boschan, C., Ebanks, W.W.: The phase-average trend: a new way of measuring growth. In: 1978 Proceedings of the Business and Economic Statistics Section. American Statistical Association, Washington, DC (1978)

    Google Scholar 

  11. Bower, U., Guillemineau, C.: Determinants of business cycle synchronisation across euro area countries. European Central Bank, WP0587 (2006)

    Google Scholar 

  12. Burns, A.F., Mitchell, W.C.: Measuring Business Cycles. National Bureau of Economic Research Books, New York (1946)

    Google Scholar 

  13. Calderon, C., Chong, A., Stein, E.: Trade intensity and business cycle synchronization: are developing countries any different? J. Int. Econ. 71, 2–21 (2007)

    Article  Google Scholar 

  14. Camacho, M., Perez-Quiros, G., Saiz, L.: Are European business cycles close enough to be just one? J. Econ. Dyn. Control 30, 1687–1706 (2006)

    Article  MATH  Google Scholar 

  15. Camacho, M., Perez-Quiros, G., Saiz, L.: Do European business cycles look like one? J. Econ. Dyn. Control 32, 2165–2190 (2008)

    Article  Google Scholar 

  16. Cancelo, J.R.: Cyclical synchronization in the EMU along the financial crisis: an interpretation of the conflicting signals. Eur. J. Gov. Econ. 1, 86–100 (2012)

    Google Scholar 

  17. Canova, F.: Detrending and business cycle facts. J. Monet. Econ. 41, 475–512 (1998)

    Article  Google Scholar 

  18. Canova, F., Ciccarelli, M., Ortega, E.: Similarities and convergence in G-7 cycles. J. Monet. Econ. 54, 850–878 (2007)

    Article  Google Scholar 

  19. Caraiani, P.: Using complex networks to characterize international business cycles. PLoS ONE 8, e58109 (2013)

    Article  Google Scholar 

  20. Chauvet, M., Yu, C.: International business cycles: G7 and OECD countries. Econ. Rev. Q. 1, 43–54 (2006)

    Google Scholar 

  21. Christiano, L., Fitzgerald, T.J.: The band-pass filter. Int. Econ. Rev. 44, 435–465 (2003)

    Article  Google Scholar 

  22. Clark, T.E., Van Wincoop, E.: Borders and business cycles. J. Int. Econ. 55, 59–85 (2001)

    Article  Google Scholar 

  23. Cogley, T., Nason, J.M.: Effects of the Hodrick-Prescott filter on trend and difference stationary time series. Implications for business cycle research. J. Econ. Dyn. Control 19, 253–278 (1995)

    Article  MATH  Google Scholar 

  24. Crucini, M.J., Kose, M.A., Otrok, C.: What are the driving forces of international business cycles? Rev. Econ. Dyn. 14, 156–175 (2011)

    Article  Google Scholar 

  25. Darvas, Z., Szapary, G.: Business cycle synchronization in the enlarged EU. Open Econ. Rev. 19, 1–19 (2008)

    Article  Google Scholar 

  26. De Haan, J., Inklaar, R., Jong-A-Pin, R.: Will business cycles in the euro area converge? A critical survey of empirical research. J. Econ. Surv. 22, 234–273 (2008)

    Google Scholar 

  27. Doyle, B.M., Faust, J.: Breaks in the variability and comovement of G-7 economic growth. Rev. Econ. Stat. 87, 721–740 (2005)

    Article  Google Scholar 

  28. Dueker, M., Wesche, K.: European business cycles: new indices and their synchronization. Econ. Inquiry. 41, 116–131 (2003)

    Article  Google Scholar 

  29. Flood, R.P., Rose, A.K.: Inflation targeting and business cycle synchronization. J. Int. Money Financ. 29, 704–727 (2010)

    Article  Google Scholar 

  30. Frankel, J.A., Rose, A.K.: Is EMU more justifiable ex post than ex ante? Eur. Econ. Rev. 41, 753–760 (1997)

    Article  Google Scholar 

  31. Gogas, P.: Business cycle synchronization in the European Union: the effect of the common currency. OECD J. J. Bus. Cycle Meas. Anal. 2013, 1–14 (2013)

    Article  Google Scholar 

  32. Gomez, D.M., Ortega, J.G., Torgler, B.: Synchronization and diversity in business cycles: a network approach applied to the European union. CREMA Working Paper, WP2012-01 (2012)

    Google Scholar 

  33. Guay, A., St.-Amant, P.: Do the Hodrick-Prescott and Baxter-King filters provide a good approximation of business cycles? Ann. Econ. Stat. 2005, 133–155 (2005)

    Google Scholar 

  34. Harding, D., Pagan, A.: Dissecting the cycle. Melbourne Institute, WP13 (1999)

    Google Scholar 

  35. Harvey, A.C., Jaeger, A.: Detrending, stylized facts and the business cycle. J. Appl. Econ. 8, 231–247 (1993)

    Article  Google Scholar 

  36. Hodrick, R.J., Prescott, E.C.: Postwar U.S. business cycles: an empirical investigation. Carnegie-Mellon University, WP45 (1980)

    Google Scholar 

  37. Inklaar, R., De Haan, J.: Is there really a European business cycle? A comment. Oxf. Econ. Pap. 53, 215–220 (2001)

    Article  Google Scholar 

  38. Koopman, S.J., Azevedo, J.V.E.: Measuring synchronization and convergence of business cycles for the Euro area, UK and US. Oxf. Bull. Econ. Stat. 70, 23–51 (2008)

    Google Scholar 

  39. Kose, M.A., Prasad, E.S., Terrones, M.E.: How does globalization affect the synchronization of business cycles? Am. Econ. Rev. 93, 57–62 (2003)

    Article  Google Scholar 

  40. Kose, M.A., Otrok, C., Whiteman, C.H.: Understanding the evolution of world business cycles. J. Int. Econ. 75, 110–130 (2008)

    Article  Google Scholar 

  41. Kose, M.A., Otrok, C., Prasad, E.: Global business cycles: convergence or decoupling? Int. Econ. Rev. 53, 511–538 (2012)

    Article  Google Scholar 

  42. Krugman, P.R.: Geography and Trade. MIT Press, Cambridge, MA (1991)

    Google Scholar 

  43. Krupa, P., Skrzypczynski, P.: Are business cycles in the US and emerging economies synchronized? National Bank of Poland, WP111 (2012)

    Google Scholar 

  44. Lee, J.: Business cycle synchronization in Europe: evidence from a dynamic factor model. Int. Econ. J. 27, 347–364 (2012)

    Article  Google Scholar 

  45. Massmann, M., Mitchell, J.: Reconsidering the evidence: are Eurozone business cycles converging? J. Bus. Cycle Meas. Anal. 1, 275–308 (2004)

    Google Scholar 

  46. Mink, M., Jacobs, J., de Haan, J.: Measuring synchronization and co-movement of business cycles with an application to the Euro area. CESifo, WP2112 (2007)

    Google Scholar 

  47. Montoya, L.A., de Haan, J.: Regional business cycle synchronization in Europe? Int. Econ. Econ. Policy 5, 123–137 (2008)

    Article  Google Scholar 

  48. Mundell, R.A.: A theory of optimum currency areas. Am. Econ. Rev. 51, 657–665 (1961)

    Google Scholar 

  49. Nilsson, R., Gyomai, G.: Cycle extraction: a comparison of the Phase-Average Trend method, the Hodrick-Prescott and Christiano-Fitzgerald filters. OECD Publishing, WP2011/4 (2011)

    Google Scholar 

  50. Rua, A.: Worldwide synchronization since the nineteenth century: a wavelet-based view. Appl. Econ. Lett. 20, 773–776 (2013)

    Article  Google Scholar 

  51. Savva, C.S., Neanidis, K.C., Osborn, D.R.: Business cycle synchronization of the euro area with the new and negotiating member countries. Int. J. Financ. Econ. 15, 288–306 (2010)

    Google Scholar 

  52. Silva, R.: Business cycle association and synchronization in Europe: a descriptive review. Issues Polit. Econ. 18, 6–53 (2009)

    Google Scholar 

  53. Stock, J.H., Watson, M.W.: Understanding changes in international business cycle dynamics. J. Eur. Econ. Assoc. 3, 968–1001 (2005)

    Article  Google Scholar 

  54. Walti, S.: The myth of decoupling. Appl. Econ. 44, 3407–3419 (2012)

    Article  Google Scholar 

  55. Wynne, M.A., Koo, J.: Business cycles under monetary union: a comparison of the EU and US. Economica 67, 347–374 (2000)

    Article  Google Scholar 

  56. Zarnowitz, V., Ozyildirim, A.: Time series decomposition and measurement of business cycles, trends and growth cycles. J. Monet. Econ. 53, 1717–1739 (2006)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, Democritus University of Thrace, Komotini, Greece

    Theophilos Papadimitriou, Periklis Gogas & Georgios Sarantitis

Authors
  1. Theophilos Papadimitriou
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Periklis Gogas
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Georgios Sarantitis
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Georgios Sarantitis .

Editor information

Editors and Affiliations

  1. Dept. Industrial & Systems Engineering, University of Florida, Gainesville, Florida, USA

    Panos M. Pardalos

  2. Department of Mathematics, National Technical University of Athens, Athens, Greece

    Themistocles M. Rassias

Rights and permissions

Reprints and permissions

Copyright information

© 2014 Springer Science+Business Media New York

About this chapter

Cite this chapter

Papadimitriou, T., Gogas, P., Sarantitis, G. (2014). Business Cycle Convergence: A Survey of Methods and Models. In: Pardalos, P., Rassias, T. (eds) Mathematics Without Boundaries. Springer, New York, NY. https://doi.org/10.1007/978-1-4939-1124-0_15

Download citation

Publish with us

Policies and ethics

Search

Navigation