Regional business cycles in Germany – convergence

In this last part of a tripartite series of articles on regional business cycles in Germany, the authors examine whether the economic cycles of the federal states have become more similar over time, i.e. that they converge. Building on Part II, the turning points computed for all the federal states are used for an initial convergence measurement. In a second step, business cycles are extracted from the turnover series using three filter procedures. With the help of rolling correlations, these can be analysed for their convergence over time with the cycle for the German economy as a whole. The results show a differentiated picture for the individual federal states. For a majority of states a convergence has already occurred, i.e. upswings and downturns occur approximately in the same period. Another group of states is characterized by a shift in the stages. Here we need to wait and see whether a convergence will occur in the future. The same holds for the city states (Hamburg, Bremen, Berlin), whose business cycles vary considerably from those of the other states.