European Integration: Some stylised facts

Figure 5. Real growth rate in GDP in the EU Member States, 1980-99

Note: The upper and lower quartiles indicate the annual real growth rate in GDP
for the member countries with the third highest and third lowest real growth
rates, respectively, in the specific year.

Source: EU Commission (1999a), Annex: Table 10. Authors’ calculation.

It is immediately apparent from the figure that the differences in growth rates
vary a lot when the country with the strongest growth is compared with the
country with the weakest growth in a specific year. A more precise picture of
the real differences in growth appears by looking at the differences in growth
rates for the upper and lower quartiles of the countries. The figure shows that
there are significant differences between the upper and lower quartiles and the
shown development does not indicate a greater synchronisation in business
cycles in the 1990s compared with the 1980s.

At first sight, it may seem surprising that the development in business cycles
has not been better synchronised in recent years given the tendency towards a
more extensive trade between Member States in the last decades, cf. Figure 1.
At the same time, exchange rates between most of the current members have
been relatively stable as a result of their participation in the fixed exchange rate
co-operation of the EMS. Under such macroeconomic conditions, there are
strong links between the development in aggregate demand in individual
Member States. A change in the aggregate demand in one country will lead to

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