Template-Type: ReDIF-Paper 1.0
Title: Has the Euro changed the Business Cycle?
Author-Name: Zeno Enders	
Author-Email: zeno.enders@uni-bonn.de
Author-Name: Philip Jung
Author-Email: p.jung@vwl.uni-mannheim.de
Author-Name: Gernot J. Müller
Author-Email: gernot.mueller@uni-bonn.de
Classification-JEL: 
Keywords: European business cycles, Euro, Optimum Currency Area, EMU, Monetary Policy, 
	Exchange rate regime, Cross-country spillovers
Abstract: In this paper we analyze European business cycles before and under EMU. Across the two
	periods we ?nd 1) a signi?cant decline in real exchange rate volatility, 2) signi?cant changes
	in cross-country correlations, and 3) the volatility of macroeconomic fundamentals largely un-
	changed. We develop a two-country business cycle model and show that the calibrated model is
	able to replicate key features of the data prior to and under EMU.We ?nd that the euro has a strong
	bearing on the transmission mechanism as cross-country spillovers increase substantially under
	EMU. As a result, foreign shocks become more and domestic shocks less important in accounting
	for the (unchanged) volatility of macroeconomic fundamentals.
Note: 
Length: 43
Creation-Date: 2009-06
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse6_2009.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse6_2009