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Regional Business Cycles in New Zealand: Do they exist? What might drive them?

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  • Viv. B Hall

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  • McDermott C. John

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 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. JEL Classification: C22, E32, R11, R12, R15 Keywords: Classical business cycle; Turning Points; Regional business cycles; Concordance statistics; New Zealand

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p200.

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Date of creation: Aug 2004
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Handle: RePEc:wiw:wiwrsa:ersa04p200

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Cited by:
  1. Claessens, Stijn & Kose, M. Ayhan & Terrones, Marco E., 2012. "How do business and financial cycles interact?," Journal of International Economics, Elsevier, Elsevier, vol. 87(1), pages 178-190.
  2. Sunoong Hwang & Yongsung Chang, 2011. "Asymmetric Phase Shifts in U.S. Industrial Production Cycles," 2011 Meeting Papers, Society for Economic Dynamics 31, Society for Economic Dynamics.
  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. 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.
  5. Arthur Grimes, 2005. "Intra & Inter-Regional Industry Shocks: A New Metric with an Application to Australasian Currency Union," Macroeconomics, EconWPA 0509019, EconWPA.
  6. Viv B. Hall & John McDermott, 2006. "The Ups and Downs of New Zealand House Prices," Working Papers, Motu Economic and Public Policy Research 06_03, Motu Economic and Public Policy Research.
  7. Sin, Isabelle & Brunton, Emma & Hendy, Joanna & Kerr, Suzi, 2005. "The likely regional impacts of an agricultural emissions policy in New Zealand: Preliminary analysis," 2005 Conference, August 26-27, 2005, Nelson, New Zealand, New Zealand Agricultural and Resource Economics Society 98506, New Zealand Agricultural and Resource Economics Society.
  8. 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, Ifo Institute for Economic Research at the University of Munich, vol. 62(14), pages 24-31, 07.
  9. Arthur Grimes, 2005. "Regional and Industry Cycles in Australasia: Implications for a Common Currency," Working Papers, Motu Economic and Public Policy Research 05_04, Motu Economic and Public Policy Research.
  10. Willie Lahari, 2011. "Assessing Business Cycle Synchronisation - Prospects for a Pacific Islands Currency Union," Working Papers, University of Otago, Department of Economics 1110, University of Otago, Department of Economics, revised Oct 2011.
  11. Viv B. Hall & C. John McDermott, 2006. "The New Zealand Business Cycle: Return To Golden Days?," CAMA Working Papers, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University 2006-21, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  12. David C Maré, 2005. "Indirect Effects of Active Labour Market Policies," HEW, EconWPA 0509004, EconWPA.
  13. repec:ebl:ecbull:v:5:y:2007:i:4:p:1-12 is not listed on IDEAS
  14. Michelle Poland & David C Maré, 2005. "Defining Geographic Communities," Urban/Regional, EconWPA 0509016, EconWPA.
  15. 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, Euro-American Association of Economic Development, vol. 6(2).

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