Reflections on the synchronization of economic cycles in Mercosur and the Eurozone

Abstract

The synchronization of business cycles is a prerequisite for proper functioning of a monetary zone. On the accession of the European Union countries to the eurozone there was some concern with this aspect. In the case of Mercosur, the absence of a single currency has allowed a greater flexibility to the monetary and fiscal policies, all this may have contributed to a greater (natural) synchronization of business cycles. Thus, it is our goal to carry out a synchronization analysis of business cycles in Mercosur and the Eurozone in order to verify if the existence, or not, of a common currency contributes to higher (resp. lower) synchronization of business cycles.