Two sides of the same union? Reviving the Optimum Currency Areas theory from the business cycle synchronisation perspective. Issue 3 (2nd April 2020)

• Record Type: Journal Article
• Authors: Stiblarova, Lubica; Sinicakova, Marianna
• Is Part Of: Post-communist economies. Volume 32:Issue 3(2020)
• Page Start: 330
• Page End: 351
• Publication Date: 2020-04-02
• Subjects: Optimum Currency Areas theory -- business cycle -- Economic and Monetary Union -- synchronisation -- Central and Eastern European countries; Post-communism -- Economic aspects -- Periodicals; Russia (Federation) -- Economic conditions -- Periodicals; Europe, Eastern -- Economic conditions -- Periodicals; 330.91717
• DOI: 10.1080/14631377.2019.1644589
• Languages: English
• ISSNs: 1463-1377

Abstract

ABSTRACT: Unlike formally determined Maastricht convergence criteria for monetary union membership in Europe, we investigate the preparedness of the Central and Eastern European countries, using the business cycle synchronisation criterion primarily proposed by the Optimum Currency Areas theory. Applying the classical business cycle approach, we estimate the business cycles and measure their synchronisation with reference economies, with emphasis on their timing during the recent global crisis. In spite of identified medium-to-high level of synchronisation, our results reveal differences in the duration of business cycle phases, depth and timing compared to the euro area aggregate/Germany and the United States. These differences are associated with the character of small open economies and the country-specific economic (fiscal) policies of these former socialist countries.