"Out of sync": The breakdown of economic sentiment cycles in the E.U.

Dimtrios D. Thomakos, Fotis Papailias

Research output: Contribution to journalArticlepeer-review


We present empirical evidence about the properties of economic sentiment cycle synchronization for Germany, France and the UK and compare them with the `crisis' countries Italy, Spain, Portugal and Greece. Instead of using output data we prefer to focus on the economic sentiment indicator (ESI), a forward-looking, survey-based variable consistently available from 1985. The cyclical nature of the ESI allows us to analyze the presence or not of synchronicity among country pairs before and after the onset of the financial crisis. Our results show that ESI movements were mostly synchronous before 2008 but they exhibit a breakdown after 2008, with this feature being more prominent in Greece. We also find that, after the political manoeuvring of the past two years, a cycle re-integration or re-synchronization is on the way. An analysis of the evolution of the synchronicity measures indicates that they can potentially be used to identify sudden phase breaks in ESI co-movement and they can offer a signal as to when the EU economies are getting “in” or “out of sync”.
Original languageEnglish
JournalReview of International Economics
Publication statusEarly online date - 24 Feb 2012


  • Business Cycles
  • Common cycles
  • Co-movement
  • Economic Sentiment Indicator
  • Recession
  • Synchronization
  • Turning Points

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