The endogeneity of optimum currency area criteria in the context of financial crisis: Evidence from the time-frequency domain analysis

We provide the wavelet analysis of the economic cycle synchronization during the recent fi nancial crisis. How- ever, the global fi nancial crisis caused economic cycles in most European countries to become more strongly synchronized without increasing of the real convergence process. Our contribution is an application of the singular value decomposition to identify and remove the long-term trend including outliers appearing in the year 2007-2010. We found that the histori- cally greater integration provides more highly synchronized cycles in the core Euro area member countries.