The Euro Area Business Cycle and its Drivers

69 Pages Posted: 7 Aug 2024

See all articles by Diego Rodriguez Palenzuela

Diego Rodriguez Palenzuela

European Central Bank (ECB)

Grigoras Veaceslav

National Bank of Romania

Lorena Saiz

European Central Bank (ECB); University of Oxford

Grigor Stoevsky

ECB

Máté Tóth

European Central Bank (ECB)

Thomas Warmedinger

European Central Bank (ECB)

Date Written: August, 2024

Abstract

The monitoring and analysis of the business cycle is a central element of inputs to monetary policy decision-making. This report contributes to the analysis of business cycles in the euro area in three dimensions. First, in terms of business cycle dating, it proposes automated procedures to characterise the business cycle situation of the euro area and its main components, across countries and sectors. Second, it investigates how business cycle synchronisation has evolved over the last 20 years. Third, it analyses business cycle drivers from several perspectives, including the financial and international dimension, interconnectedness, demand and supply. It also features an early analysis of the economic implications of the COVID-19 pandemic. Rather than reaching strong conclusions on the history of the euro area business cycle, the primary aim of the report is to promote sound methods and approaches that are part of ongoing enhancements of the analytical infrastructure designed to analyse hard-to-ascertain questions on the nature and characteristics of euro area business cycle dynamics.

Keywords: business cycle dating, characteristics, drivers, synchronisation

JEL Classification: C10, E32, E37

Suggested Citation

Palenzuela, Diego Rodriguez and Veaceslav, Grigoras and Saiz, Lorena and Stoevsky, Grigor and Tóth, Máté and Warmedinger, Thomas, The Euro Area Business Cycle and its Drivers (August, 2024). ECB Occasional Paper No. 2024/354, Available at SSRN: https://ssrn.com/abstract=4917065

Diego Rodriguez Palenzuela (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Grigoras Veaceslav

National Bank of Romania ( email )

Lipscani no. 25
Bucuresti, 030031
Romania

Lorena Saiz

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Grigor Stoevsky

ECB ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Máté Tóth

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Thomas Warmedinger

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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