Core-Periphery Business Cycle Synchronization in Europe and the Great Recession

This article investigates the dynamics of business cycle synchronization in Europe. The European core business cycle is estimated by means of a cyclical trend decomposition model, and a testing procedure is proposed to study the stability of the interdependencies between the GDP growth rates of the economies and the cyclical common factor. Results show an extended European business cycle moving toward the synchronization levels enjoyed by core countries. In a second group of periphery economies (mainly economies of the EU enlargements of the 2000s) synchronization has increased since the beginning of the Great Recession.