Business cycle harmonization in new and old EU member-states

The study analyses the degree of similarity in the business cycles of the EMU members and eight new Central and Eastern European (CEE) EU members, for which EMU accession will be the next stage of integration. The coincidence of cycles is usually regarded as one of the most important optimal currency area properties. While the business cycles of Hungary, Poland and Slovenia greatly approximate to those of the EMU countries in GDP, industrial production and exports, the same cannot be said of consumption or services. The other CEE countries show little or no coincidence in their cycles. The EMU countries have managed to achieve increasing harmonization of their cycles, which could support the endogeneity of optimum currency areas.