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Common trends and common cycles in Canada: who knew so much has been going on?

  • Elizabeth Wakerly
  • Byron Scott
  • James Nason

It is generally accepted that convergence is well established for Canadian regional outputs. Another prevalent belief is that the Canadian regions respond symmetrically to the same aggregate shocks. A common trends - common cycles decomposition of Canadian regional outputs casts doubt on the convergence hypothesis and reveals trend shocks dominate fluctuations in Ontario, Quebec, and the Maritimes in the short and long run, but not in British Columbia and the Prairies. Thus, Canadian regional output fluctuations are driven by an asymmetric and economically important set of disaggregate propagation and growth mechanisms. Our results point to a new Canadian macroeconomic research agenda.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 39 (2006)
Issue (Month): 1 (February)
Pages: 320-347

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Handle: RePEc:cje:issued:v:39:y:2006:i:1:p:320-347
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