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Studies in Nonlinear Dynamics & Econometrics

Ed. by Mizrach, Bruce


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Volume 24 (2020)

The European growth synchronization through crises and structural changes

Merih Uctum / Remzi Uctum
  • EconomiX, Centre National de la Recherche Scientifique / Université Paris Nanterre, Nanterre, France
  • Other articles by this author:
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/ Chu-Ping C. Vijverberg
  • College of Staten Island and the Graduate Center, City University of New York, Staten Island, NY, USA
  • Other articles by this author:
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Published Online: 2019-12-07 | DOI: https://doi.org/10.1515/snde-2018-0097

Abstract

In light of several economic and financial crises and institutional changes experienced by the European countries, we examine whether these economies achieved synchronization of their business cycles and fostered synchronization of their growth rates. Controlling for reverse causality, we conduct multiple endogenous break tests and find that (i) several endogenous break dates correspond to idiosyncratic shocks affecting individual countries or major shocks in international arena but not the adoption of the euro; this result suggests that the convergence process has been nonlinear for a number of countries and that studies imposing break dates exogenously, such as the launch of euro, may lead to biased conclusions; (ii) while output growth was increasingly synchronized for some countries, integration occurred in an asymmetric way and it did not change or did not occur for others despite being in the same common currency area (iii) convergence has been prevalent among the non-Eurozone economies in our sample.

This article offers supplementary material which is provided at the end of the article.

Keywords: convergence; crises; euro; growth synchronization; structural breaks

JEL Classification: E3; F4; F6

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Published Online: 2019-12-07


Citation Information: Studies in Nonlinear Dynamics & Econometrics, 20180097, ISSN (Online) 1558-3708, DOI: https://doi.org/10.1515/snde-2018-0097.

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