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Common and Spatial Drivers in Regional Business Cycles

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  • Michael Artis
  • Christian Dreger
  • Konstantin A. 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 of common business cycle factors is rather stable over the past two decades in the euro area and the US. Ongoing business cycle convergence often detected in a country data is not confirmed at the regional level. The degree of synchronization across the euro area is similar to that to be found for the US states. Thus, the lack of convergence does not seem to be an impediment to a common monetary policy.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.94896.de/dp859.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 859.

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Length: 10 p.
Date of creation: 2009
Date of revision:
Handle: RePEc:diw:diwwpp:dp859

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

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  1. Gabriele Tondl & Iulia Traistaru-Siedschlag, 2006. "Regional growth cycle synchronisation with the Euro Area," Papers, Economic and Social Research Institute (ESRI) WP173, Economic and Social Research Institute (ESRI).
  2. Artis, Michael J & Zhang, W, 1997. "International Business Cycles and the ERM: Is There a European Business Cycle?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 2(1), pages 1-16, January.
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  6. Artis, Michael & Okubo, Toshihiro, 2009. "Globalization and business cycle transmission," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 20(2), pages 91-99, August.
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  15. Fratantoni, Michael & Schuh, Scott, 2003. " Monetary Policy, Housing, and Heterogeneous Regional Markets," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 35(4), pages 557-89, August.
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Cited by:
  1. Juergen Bierbaumer-Polly, 2012. "Regional and Sectoral Business Cycles - Key Features for the Austrian economy," EcoMod2012 4074, EcoMod.
  2. 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, Euro-American Association of Economic Development, vol. 13(1), pages 91-104.

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