Abstract
This empirical paper is concerned with the determination of business cycle synchronization. I focus in particular on the role of monetary regimes. Inflation targeting seems to have a small but positive effect on the synchronization of business cycles; countries that target inflation seem to have cycles that move more closely with foreign cycles. Monetary union also has a positive effect on business cycle synchronization, and in turn is more sustainable with greater synchronization. This suggests that a regime of inflation targeting can be useful in easing the transition towards monetary union, above and beyond any of its intrinsic merits.
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