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There are groups of countries for which booms and recessionsof economic activity occur approximately at the same time. They aresaid to have synchronous business cycles. However, there arecountries the economic activity of which fluctuates very unevenlyin relation to one another. This book uses several differentmethodologies to evaluate what effects the several factors have onbilateral business cycle synchronization. The book finds strongevidence that the bilateral trade intensity and similarity ofeconomic development have the effect on business cyclesynchronization. The findingsof this work suggest that the truecosts of joining a monetary union might be overestimated due toconvergence and increased trade after joining a monetary union. Thebook also discusses how the findings may have implications to thecoordination of fiscal policy between countries, financialportfolio management as well as the help in the discussion of whichcurrency regime to choose: free float or a fix.
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