Business Cycle Synchronization Across the Euro Area: a Wavelet Analysis∗

We use wavelets, cross-wavelets, wavelet-phase analysis, wavelet-clustering and multidimensional mapping to study business cycle synchronization across countries that are part of the Euro12 Area. Based on the wavelet spectra, we propose a metric to measure business cycle disynchronicity. We identify Germany, France, Spain, Austria and the Benelux countries as the core of the Euroland and another group with a less synchronous business cycle and ask whether these latter countries are converging to the Euroland core, and, if so, at what frequencies. With the exception of Portugal, all countries are converging to the Euro core. This convergence is particularly strong in the case of Ireland and Italy.