A nonparametric analysis of the international business cycle

This paper examines the emergence of economic clubs and its coherence with the European commitments by analysing business cycle comovements in six industrialised economies, which are pooled into four different clusters. Starting from turning points chronologies, a binary measure of association for expansion and contraction regimes is used to perform a nonparametric analysis. This framework allows to address the relative groupwise dependency and not only the frequently studied pairwise correlations, under very few assumptions. Studying relative dependency is important in order to establish if and how much "europeanization" is a different phenomenon with respect to globalization. Data lead to conclude that an English-speaking club is emerging in the last decades, whereas explicit and formal commitments seem to have had a relatively weaker power in determining Euro-zone business cycles comovements. Since European commitments failed to pass the "English exam", some additional problem could arise should the UK adopt the Euro.