Are there Large Asymmetric Disturbances between Euro Zone Member Countries and other EU Countries?

On May 1, 2004, ten countries entered the European Union. These new member states are expected to adopt the Euro when they are ready, but not immediately upon accession. Although the decision about new entrants to the Euro-zone will be based on the convergence criteria, optimum currency area theory stresses that members of a currency union should experience symmetric shocks and that their economic cycles should be synchronous. This paper presents empirical evidence about the synchronization of business cycles and the similarities in economic shocks for the enlarged European Union and some neighboring countries