An Empirical Analysis of Romania’s Comovement with the Euro Zone

Theoretical and Applied Economics 01/2009; 11(540)(11(540)):41-50.
Source: RePEc


In light of adopting the euro in the near future, it is important to asses to which extent the Romanian business cycle evolves in a similar fashion with that of the euro zone. The present study is an empirical investigation of the degree of business cycle synchronization between Romania and the euro area, based on macroeconomic series that capture the cyclical features of the two economies. The results indicate that the most recent period, characterized by major economic and financial turmoil, has lead to an increase of the degree of comovement between of the Romanian economy with that of the euro area.

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    • "However, Atanas Damyanov and Galin Stefanov (2010) observed the synchronization of business cycles in Bulgaria and the European Union through two sub-periods, and concluded that a much higher degree of business cycle synchronization was recorded during the second sub-period than in the first. Nicolae Dardac and Elena Bojesteanu (2009) analysed the movements of business cycles in Romania and in the euro area countries. Their analysis favours the adoption of the euro. "
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    ABSTRACT: The synchronization of business cycles represents one of the conditions that countries have to fulfil to become part of an optimum currency area, as well as a condition for the efficient implementation of a common economic policy in these countries. This paper examines the extent to which Serbia and its neighbouring countries fulfil these conditions, taking the euro area as an optimum currency area. By applying the Hodrick-Prescott and the band-pass filters, as well as the Pearson correlation coefficient and the Spearman rank correlation coefficient, this paper examines the synchronization of business cycles in these countries. Taking Serbia as an example, the influence of the foreign trade volume between two countries on the similarity of their business cycles is tested. The results show a lower harmonization of business cycles in Serbia with those in the euro area, when compared with the selected neighbouring countries, and do not confirm the thesis on the influence of the foreign trade volume on the harmonization of business cycles.
    Full-text · Article · Jan 2013 · Panoeconomicus
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    ABSTRACT: This paper examines the degree of business cycles synchronization between Romania and the Euro area, by using Germany as a benchmark for the area economic cycle. The period of the study is 2000 – 2011, with a special emphasis on the recent economic and financial crisis. Using the Hodrick-Prescott filter, we findimportant,but decreasing correlations in times of crisis in the level of GDP.Furthermore, the analysis by GDP components reveals that private consumption remains the least correlated with the Euro area, while foreign trade is highly correlated and its synchronization even increased during the recent crisis.
    Full-text · Article · Nov 2012