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N° 2004-17 |
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| November 2004 |
| UK in or UK Out? A Common Cycle Analysis
Between the UK and the Euro Zone |
| Julien Garnier |
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| We use a structural model estimated by the
Kalman filter in order to extract the common cycle for different groups of OECD
countries. We try to evaluate to what extent the Euro zone common cycle is affected
by the inclusion of the UK into the group. An important result of this work is
that adding the UK to the Euro group does not lead to a greater heterogeneity
of the group as a whole. Besides, the UK business cycle is not much different
from Euro zone cycles. Another point is that the influence of the UK on the `Euro
plus UK' common cycle is less obvious for output than for consumption, public
expenditures or investment series. This suggests the importance of taking into
account the components of output when analysing business cycles. |
Abstract |
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| Common Business Cycles; UK/Euro zone; Optimal
Currency Areas; Kalman Filter |
Keywords |
| E32; F02; F4 |
JEL classification |
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