Advanced Search
MyIDEAS: Login to save this paper or follow this series

National Policies and Local Economies: Europe and the United States

Contents:

Author Info

  • Forni, Mario
  • Reichlin, Lucrezia

Abstract

This paper studies the synchronization of output fluctuations in European regions and US counties. We extend the two component dynamic factor model à la Sargent and Sims (1977) by introducing an intermediate-level shock, which is common to all regions (counties) in each country (state), but it is not common to Europe (United States) as a whole. We build on Forni and Reichlin (1995, 1996) to propose a simple method of estimation which is based on Law of Large Numbers results and exploits the large cross-sectional dimension of the data set. The empirical findings show that Europe has a level of integration similar to that of the United States. In general, we find that the national dimension in Europe is not very important: around 75% of output variance is explained by global and purely local dynamics. Similar numbers are found for US counties and US states. The study of the dynamic profile of the components, however, shows that Europe, unlike the United States, has no traditional business cycle. Shocks are very persistent and the bulk of the variance is in the long run. We also find a European core of regions with a particularly high level of integration. The core is not defined by a set of nations, however, but by regions belonging to different countries.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cepr.org/pubs/dps/DP1632.asp
Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1632.

as in new window
Length:
Date of creation: Apr 1997
Date of revision:
Handle: RePEc:cpr:ceprdp:1632

Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820

Order Information:
Email:

Related research

Keywords: Business Cycle; Dynamic Factor Model; European Integration;

Other versions of this item:

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:1632. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.