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. [Projekat
 Ministarstva nauke Republike Srbije, br. 179015: Challenges and prospects of
 structural changes in Serbia: Strategic directions for economic development
 and harmonization with EU requirements]

http://www.doiserbia.nb.rs/img/doi/1452-595X/2013/1452-595X1306759O.pdf

Synchronization of Business Cycles in the Selected European Countries

The paper aims to evaluate the degree of business cycle synchronization and the similarity of production structures between Romania and the eurozone, drawing a comparison with other new member states. Although there has been significant progress, business cycle correlation with the eurozone is still lower in Romania than in other regional peers. Moreover, the empirical evidence regarding the similarity of production structures reveals a widening gap vis-a-vis the eurozone during the transition period. The results suggest that it is less advisable for Romania to join the eurozone than for other countries in Central and Eastern Europe.

Empirical Analysis of Business Cycle Synchronization and Shock Similarity Between Romania and the Eurozone

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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Elena Bojesteanu

Papers

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