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Convergence of the Economic Sentiment Cycles in the Eurozone: A Time-Frequency Analysis

Authors

  • Luís Aguiar-Conraria,

    1. Economic Policies Research Unit (NIPE) and Department of Economics, University of Minho
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  • Manuel M.F. Martins,

    Corresponding author
    1. Centre for Economics and Finance at the University of Porto (Cef.up) and Faculty of Economics, University of Porto
    • Economic Policies Research Unit (NIPE) and Department of Economics, University of Minho
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  • Maria Joana Soares

    1. Economic Policies Research Unit (NIPE) and Department of Mathematics and Applications, University of Minho
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  • The authors are grateful to the Editor of JCMS and two anonymous referees for very useful comments and suggestions. Authors are in alphabetical order. NIPE and Cef.up are supported by the Fundação para a Ciência e a Tecnologia (FCT), Portugal.

Correspondence:

Manuel M.F. Martins

Cef.up and Faculty of Economics

University of Porto

4200 PORTO

Portugal

email: mmfmartins@fep.up.pt

Abstract

In this article, wavelet tools and economic sentiment indicators are used to study the similarity and synchronization of economic cycles in the eurozone. The time-varying and frequency-varying patterns of business cycles synchronization are assessed and the impact of the creation of the European monetary union (EMU) in 1999 is tested. Among several results, it is found that: the EMU is associated with a significant increase in the similarity and synchronization of the economic sentiment in the eurozone; and the hard-peg of its currency to the euro led to a comparable effect on Denmark's economic sentiment after 1999, different from what happened in the United Kingdom.

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