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Common and Spatial Drivers in Regional Business Cycles

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  • Michael Artis
  • Christian Dreger
  • Konstantin Kholodilin

Abstract

We examine real business cycle convergence for 41 euro area regions and 48 US states.Results obtained by a panel model with spatial correlation indicate that the relevance ofcommon business cycle factors is rather stable over the past two decades in the euro area andthe US. Ongoing business cycle convergence often detected in cross-country data is notconfirmed at the regional level. The degree of synchronization across the euro area is similarto that to be found for the US states. Thus, the lack of convergence does not seem to be animpediment to a common monetary policy.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0022.

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Date of creation: Apr 2009
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Handle: RePEc:cep:sercdp:0022

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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Keywords: Business cycle convergence; spatial correlation; spatial panel model;

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  1. Jushan Bai & Serena Ng, 2002. "Determining the Number of Factors in Approximate Factor Models," Econometrica, Econometric Society, vol. 70(1), pages 191-221, January.
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Cited by:
  1. Correia, L. & Gouveia, S., 2013. "Business cycle synchronisation at the regional level: evidence for the Portuguese regions," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(1), pages 91-104.

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