Journal
JOURNAL OF MACROECONOMICS
Volume 38, Issue -, Pages 487-496Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.jmacro.2013.08.007
Keywords
Business cycle accounting; Business cycle synchronization
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This paper uses the business cycle accounting framework to investigate the differences between economic fluctuations in Central and Eastern European (CEE) countries and the euro area. We decompose output movements into the contributions of four economic wedges, affecting the production technology, the agents' intra- and intertemporal choices, and the aggregate resource constraint. We next analyze the observed cross-country differences in business cycles with respect to these four identified wedges. Our results indicate that business cycles in the CEE countries do differ from those observed in the euro area, even though substantial convergence has been achieved after the eastern EU enlargement. The major differences concern the importance of the intra- and intertemporal wedges, which account for a larger proportion of output fluctuations in the CEE region and also exhibit relatively little comovement with their euro area counterparts. (C) 2013 Elsevier Inc. All rights reserved.
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