Following Kydland and Prescott's (1982) seminal paper, a key question that has been debated widely remains, `Are business cycles mainly the result of permanent shocks to productivity?' This paper attempts to answer this question in the context of the Euro area economy as a whole, given current...

This paper presents Monte Carlo simulations for the Johansen cointegration test which indicate that the critical values applied in a number of econometrics software packages are inappropriate. This is due to a confusion in the specification of the deterministic terms included in the VECM between...