Business cycles, core and periphery in monetary unions: comparing Europe and North America

Abstract

Using different levels of regional aggregation, we compare Europe with the USA and Canada as regards business cycle synchronization and core-periphery patterns. A long annual sample (1950-2005) makes it possible to study how these aspects have evolved over time. Results support the economic viability of EMU. Average cyclical correlations among European countries have risen significantly, reaching levels close to those of North American regions. Applying fuzzy clustering to the analysis of core-periphery issues, we find European countries to actually outperform USA Census Regions: the core-periphery divide is milder, and peripheral status seems generally less protracted.