A Meta-Analysis of Business Cycle Correlations between the Euro Area, CEECs and SEECs – What Do We Know?

We review the literature on business cycle correlation between the euro area, eight new EU Member States (the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia), and two Southeastern European candidate countries (Bulgaria and Romania) which are expected to join the EU in 2007. Our meta-analysis suggests that several new Member States have already achieved a comparably high degree of synchronization with the euro area business cycle. We also find that estimation methodologies can have a significant effect on correlation coefficients. Finally, we show that Bulgaria and Romania also display a lower but still positive correlation of business cycles with Europe, although these countries have been increasingly disregarded in most recent publications.