The Financial Crisis in the Light of the Euro Area Accounts

AbstractThe introduction of Euro currency was a game-changing event intended to induce convergence of Eurozone business cycles on the basis of greater monetary and fiscal integration. The benefit of participating into a common currency area exceeds the cost of losing autonomy in national monetary policy only in case of cycle co-movement. However, synchronization was put back mainly due to country-specific differences and asymmetries in terms of trade and fiscal policies that became profound at the outset of the global financial crisis. As opposed to previous studies that are mostly based on linear correlation or causality modeling, we utilize the cross-wavelet coherence measure to detect and identify the scale-dependent time-varying (de)synchronization effects amongst Eurozone and the broad Euro area business cycles before and after the financial crisis. Our results suggest that the enforcement of an active monetary policy by the ECB during crisis periods could provide an effective stabilization instrument for the entire Euro area. However, as dynamic patterns in the lead-lag relationships of the European economies are revealed, (de)synchronization varies across different frequency bands and time horizons.

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Economic cycle synchronization in the context of financial crisis: empirical evidence of Denmark, Sweden and United Kingdom

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis ◽

10.11118/actaun201260070155 ◽

2012 ◽

Vol 60 (7) ◽

pp. 155-162

Author(s):

Svatopluk Kapounek ◽

Jan Sečkař

Keyword(s):

Monetary Policy ◽

United Kingdom ◽

Financial Crisis ◽

Empirical Evidence ◽

Euro Area ◽

Theoretical Background ◽

Average Level ◽

Economic Cycle ◽

Economic Cycles

The paper focuses on the economic cycle synchronization of the euro area outsiders: Denmark, Sweden and United Kingdom. The authors discussed openness of the selected economies, their structural similarities and economic cycle synchronization in the years 2000–2011. They applied moving correlation and correlation between the selected countries and the euro area. They found significant synchronization of the economic cycles after the year 2005. Furthermore, economic cycles of the analyzed countries were exceptionally synchronized than the euro area average level.Our contribution is in comparison of the economic cycle synchronization in the selected countries with the euro area average. The authors assume that changes in order provide important information about the synchronization, unbiased by the consequences of the financial crisis in the year 2007.A theoretical background for the final discussions provided new version of the OCA theory focused on the costs associated with the loss of the monetary policy autonomy. The authors concluded that selected countries were not protected against the global macroeconomic shock after the year 2007, although they keep the autonomous monetary policy.

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The Global Economic Crisis and its Effects in Romania

Journal of Education and Vocational Research ◽

10.22610/jsds.v3i8.712 ◽

2012 ◽

Vol 3 (8) ◽

pp. 286-292

Author(s):

Alexandru Trifu

Keyword(s):

Financial Crisis ◽

Adverse Effects ◽

Economic Crisis ◽

Human Activity ◽

Euro Area ◽

Social Groups ◽

European Countries ◽

Deficit Reduction ◽

Global Economic Crisis ◽

The U.S

The crises represent malfunctions that may occur within every domain of the human activity. That is why the causes, their way of emergence and their consequences are studied. The crisis is analyzed by economists considering specific criteria, these offering it the characteristics of a phenomenon with poisonously consequences for the affected organizations, institutions and social groups: inflation, unemployment, stagnation, recession etc. The evolution of the financial crisis will lead economies into a deflationary spiral in the next year or even a longer lasting, as deficit reduction efforts will take large, and probably we shall assist an output of some euro area of weaker states. World economies are hit by this crisis to various extents, depending on the vulnerabilities of each and their exposure to toxic assets. The response to the crisis is contingent upon the fundamental principles we believe in, the available resources, the institutions and the instruments we can make use of. In Romania, the response to the adverse effects of the crisis cannot be similar to that made by some European countries or the U.S. There are several differences between the Romanian economy and these economies, which do not allow copying the package of measures developed there.

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