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“Out of Sync”: The Breakdown of Economic Sentiment Cycles in the EU
Author(s) -
Thomakos Dimitrios D.,
Papailias Fotis
Publication year - 2014
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12101
Subject(s) - synchronicity , sync , synchronization (alternating current) , business cycle , economics , politics , focus (optics) , financial crisis , monetary economics , econometrics , financial economics , macroeconomics , computer science , political science , psychology , telecommunications , law , physics , channel (broadcasting) , optics , psychoanalysis
Empirical evidence is presented about the properties of economic sentiment cycle synchronization for G ermany, F rance and the UK and they are compared with the “crisis” countries I taly, S pain, P ortugal and G reece. Instead of using output data it is preferred to focus on the economic sentiment indicator ( ESI ), a forward‐looking, survey‐based variable consistently available from 1985. The cyclical nature of the ESI allowed the analyis of the presence or not of synchronicity among country pairs before and after the onset of the financial crisis. The results show that ESI movements were mostly synchronous before 2008 but they exhibit a breakdown after 2008, with this feature being more prominent in G reece. It is also found that, after the political maneuvering of the past two years, a cycle re‐integration or re‐synchronization is on the way. An analysis of the evolution of the synchronicity measures indicates that they can potentially be used to identify sudden phase breaks in ESI co‐movement and they can offer a signal as to when the EU economies are getting “in” or “out of sync”.