DETERMINANTS OF ASYMMETRY IN THE CYCLICAL FLUCTUATIONS BETWEEN CEECs AND EURO AREA

This paper analyzes the links between business cycle correlation and trade intensity, sectoral specialization and higher degree of monetary and fiscal policy coordination. We apply the analysis to Central and Eastern European Countries (CEES) in relation to euro area over the period 2004-2006. The main objective is to determine if in the initial stages of trade liberalization and European integration (2004-2006) the best results in the business cycle correlation correspond to the best results in those three variables. The results show that in general, the synchronization of cycles between CEES and euro area is linked to trade intensity, specialization intra-industrial, and greater policy coordination.