Abstract
AbstractWe analyze the degree of co‐movements in real macroeconomic aggregates across selected euro area andCentral andEasternEuropean (CEE) countries applying a multi‐factor model. Our results suggest that the evolution of the globalEuropean factor matches well the narrative of main economic events between 1995 and 2011, capturing among others the recession during the recent global financial and economic crisis. This factor plays a central role in explaining real output growth variability in euro area and is negligible inCEEcountries. Furthermore, usingMarkov switching models and concordance indices, we shed light on an increase in business cycle synchronization, with the degree of concordance between country‐specific and European business cycles being high.
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