Karadimitropoulou, K, "Lost in Aggregation: European, Country, Sectoral and Regional Factors driving Business Cycle Fluctuations in the Eurozone" | POSTPONED

POSTPONED

Title: "Lost in Aggregation: European, Country, Sectoral and Regional Factors driving Business Cycle Fluctuations in the Eurozone" (with Krzysztof Beck)

Speaker:  Assistant Professor Katerina Karadimitropoulou, University of Piraeus

Host: Assistant Professor Kospentaris Ioannis, Department of Economics, Athens University of Economics and Business

Time: 15.30 -17.00

Room: 76, Patission Str., Antoniadou Wing, 3rd floor, Room A36

Abstact: Ongoing monetary integration in Europe requires close monitoring of the degree of business cycle (BC) synchronization to assess the effectiveness of the common monetary policy. A Bayesian dynamic latent factor model is estimated using disaggregated real gross value added (GVA) data that includes four different types of factors: European, country, sectoral and regional. A richer factor structure reduces the variance attributed to the European factor (9%), while country, sectoral, and regional factors account for 26%, 21%, and 27%, respectively. Sectoral factors are the main drivers of international BC. Sub-periods analysis shows that the share of variance explained by the European factor increased modestly, while the share explained by the sectoral factor increased significantly at the expense of the country factor. The results support the European Commission's view on the synchronization of BC in the monetary union. Finally, the importance of commodity, monetary, fiscal, productivity, and terms of trade factors is examined for the European and country factors using vector autoregression models.