Business cycle convergence in EMU: A first look at the second moment

We propose the analysis of the dynamics of the standard deviation of business cycles across
euro area countries in order to evaluate the patterns of cyclical convergence in the European
Monetary Union for the period 1960-2008. We identify significant business cycle divergence
taking place in the mid-eighties, followed by a persistent convergence period spanning most of
the nineties. This convergent episode finishes roughly with the birth of the European Monetary
Union. We show that a hypothetical euro area including all the new members of the recent
enlargement rounds does not imply a sizeable decrease in the optimality of the currency union.
Finally, the European synchronization differential with respect to other developed economies
seems to have been diluted within a global cycle since 2004.