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Regional business cycles in New Zealand: Do they exist? What might drive them?

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  • Viv Hall

    ()
    (Victoria University of Wellington)

  • C. John McDermott

    ()
    (National Bank of New Zealand)

Abstract

We use National Bank of New Zealand Regional Economic Activity data, to identify and characterise classical business cycle turning points, for New Zealand's 14 regions and aggregate New Zealand activity. Using Concordance statistic measures, logistic model and GMM estimation methods, meaningful regional business cycles have been identified and a number of significant associations established. All regions exhibit cyclical asymmetry for both durations and amplitudes, and synchronisations between aggregate NZ activity and each region are contemporaneous. The regional cycles rarely die of old age but are terminated by particular events. The regions most highly synchronised with the NZ activity cycle are Auckland, Canterbury, and Nelson-Marlborough; those least so are Gisborne and Southland. Noticeably strong co-movements are evident for certain regions. Geographical proximity matters, and unusually dry conditions can be associated with cyclical downturns in certain regions. There is no discernable evidence of association with net immigration movements, and no significant evidence of regional cycle movements being associated with real national house price cycles. The agriculture-based nature of the New Zealand economy is highlighted by the strong influence of external economic shocks on rural economic performance. In particular, there is considerable evidence of certain regional cycles being associated with movements in New Zealand's aggregate terms of trade, real prices of milksolids, real dairy land prices and total rural land prices.

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Bibliographic Info

Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 04_10.

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Length: 40 pages
Date of creation: Oct 2004
Date of revision:
Handle: RePEc:mtu:wpaper:04_10

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Keywords: Classical business cycle; Turning Points; Regional business cycles; Concordance statistics; New Zealand;

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References

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Cited by:
  1. Arthur Grimes, 2005. "Regional and Industry Cycles in Australasia: Implications for a Common Currency," Macroeconomics 0509020, EconWPA.
  2. Arthur Grimes, 2005. "Intra & Inter-Regional Industry Shocks: A New Metric with an Application to Australasian Currency Union," Macroeconomics 0509019, EconWPA.
  3. Jacques Poot & Bill Cochrane & Sandra Baxendine, 2005. "Description and Spatial Analysis of Employment Change in New Zealand Regions 1986-2001," Population Studies Centre Discussion Papers, University of Waikato, Population Studies Centre dp-57, University of Waikato, Population Studies Centre.
  4. David C Maré, 2005. "Indirect Effects of Active Labour Market Policies," HEW 0509004, EconWPA.
  5. Claessens, Stijn & Kose, M. Ayhan & Terrones, Marco E., 2012. "How do business and financial cycles interact?," Journal of International Economics, Elsevier, vol. 87(1), pages 178-190.
  6. Michelle Poland & David C Maré, 2005. "Defining Geographic Communities," Urban/Regional 0509016, EconWPA.
  7. Isabelle Sin & Emma Brunton & Joanna Hendy & Suzi Kerr, 2005. "The likely regional impacts of an agricultural emissions policy in New Zealand: Preliminary analysis," Others 0509010, EconWPA.
  8. Sunoong Hwang & Yongsung Chang, 2011. "Asymmetric Phase Shifts in U.S. Industrial Production Cycles," 2011 Meeting Papers 31, Society for Economic Dynamics.
  9. Willie Lahari, 2011. "Assessing Business Cycle Synchronisation - Prospects for a Pacific Islands Currency Union," Working Papers 1110, University of Otago, Department of Economics, revised Oct 2011.
  10. repec:ebl:ecbull:v:5:y:2007:i:4:p:1-12 is not listed on IDEAS
  11. Tsoulfidis, L. & Dergiades, Th., 2006. "The Inflation-Capacity Utilization Conundrum: Evidence from the Canadian Economy," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(2).
  12. Viv B. Hall & John McDermott, 2014. "Recessions and Recoveries in New Zealand's Post-Second World War Business Cycles," Reserve Bank of New Zealand Discussion Paper Series DP2014/02, Reserve Bank of New Zealand.
  13. Beate Schirwitz & Christian Seiler & Klaus Wohlrabe, 2009. "Regionale Konjunkturzyklen in Deutschland – Teil II: Die Zyklendatierung," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 62(14), pages 24-31, 07.
  14. Viv B. Hall & John McDermott, 2006. "The Ups and Downs of New Zealand House Prices," Working Papers 06_03, Motu Economic and Public Policy Research.
  15. Viv B. Hall & C. John McDermott, 2006. "The New Zealand Business Cycle: Return To Golden Days?," CAMA Working Papers 2006-21, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.

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