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One Business Cycle and One Trend from (Many) Many Disaggregates

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  • Quah, Danny

Abstract

Typical analyses of trends and cycles take as given some (one) observable economic variable in whose time path a researcher wishes to find trend and cycle movements. But individual sectors and regions in aggregate economies move neither perfectly with nor independently of each other -- why is it useful to study their aggregate? Using a model for non-stationary, dynamically evolving distributions, this paper provides evidence that in the United States, regional movements that preserve their aggregate time path nevertheless have important, predictive comovements with aggregate GNP. Such predictive content cannot be understood in traditional macro models that seek the source for business cycles in aggregate productivity or monetary shocks.

Suggested Citation

  • Quah, Danny, 1994. "One Business Cycle and One Trend from (Many) Many Disaggregates," CEPR Discussion Papers 873, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:873
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    1. Danny Quah & Thomas J. Sargent, 1993. "A Dynamic Index Model for Large Cross Sections," NBER Chapters, in: Business Cycles, Indicators, and Forecasting, pages 285-310, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Luca Stanca & Domenico Delli Gatti & Mauro Gallegati, 1999. "Financial fragility, heterogeneous agents, and aggregate fluctuations: evidence from a panel of US firms," Applied Financial Economics, Taylor & Francis Journals, vol. 9(1), pages 87-99.
    2. Catherine Fuss, 1999. "Mesures et tests de convergence : une revue de la littérature," Revue de l'OFCE, Programme National Persée, vol. 69(1), pages 221-249.
    3. Guido Fioretti, 2005. "A Model of Primary and Secondary Waves in Investment Cycles," Computational Economics, Springer;Society for Computational Economics, vol. 24(4), pages 357-381, June.
    4. Kawagoe, Masaaki, 1999. "Regional Dynamics in Japan: A Reexamination of Barro Regressions," Journal of the Japanese and International Economies, Elsevier, vol. 13(1), pages 61-72, March.
    5. Danny Quah, 1996. "Convergence as Distribution Dynamics (with or without Growth)," CEP Discussion Papers dp0317, Centre for Economic Performance, LSE.
    6. Quah, Danny, 1996. "Aggregate and regional disaggregate fluctuations," LSE Research Online Documents on Economics 2081, London School of Economics and Political Science, LSE Library.
    7. Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
    8. Quah, Danny, 1995. "Empirics for economic growth and convergence," LSE Research Online Documents on Economics 2136, London School of Economics and Political Science, LSE Library.
    9. Guglielmo D’Amico & Giuseppe Di Biase & Raimondo Manca, 2011. "Immigration Effects On Economic Systems Through Dynamic Inequality Indices," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(5), pages 11-25.
    10. Magrini, Stefano, 1999. "The evolution of income disparities among the regions of the European Union," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 257-281, March.
    11. Danny Quah, 1996. "Aggregate and Regional Disaggregate Fluctuations," CEP Discussion Papers dp0275, Centre for Economic Performance, LSE.
    12. D'Amico, Guglielmo & Di Biase, Giuseppe & Manca, Raimondo, 2012. "Income inequality dynamic measurement of Markov models: Application to some European countries," Economic Modelling, Elsevier, vol. 29(5), pages 1598-1602.
    13. Bruno, C. & Fuss, C., 1999. "Asymmetries on European labour markets," Documents de Travail de l'OFCE 1999-03, Observatoire Francais des Conjonctures Economiques (OFCE).
    14. Sergio J. Rey & Mark V. Janikas, 2005. "Regional convergence, inequality, and space," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 155-176, April.
    15. Danny Quah, 1995. "Empirics for Economic Growth and Convergence," CEP Discussion Papers dp0253, Centre for Economic Performance, LSE.
    16. Wakerly, Elizabeth C., 2002. "Disaggregate dynamics and economic growth in Canada," Economic Modelling, Elsevier, vol. 19(2), pages 197-219, March.
    17. Quah, Danny T., 1996. "Regional convergence clusters across Europe," European Economic Review, Elsevier, vol. 40(3-5), pages 951-958, April.
    18. Guglielmo D’Amico & Giuseppe Di Biase & Raimondo Manca, 2015. "Measuring Income Inequality: An Application Of The Population Dynamic Theil'S Entropy," Accounting & Taxation, The Institute for Business and Finance Research, vol. 7(1), pages 103-114.
    19. Magrini, Stefano, 2004. "Regional (di)convergence," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 62, pages 2741-2796, Elsevier.
    20. Sergio J. Rey & Mark V. Janikas, 2003. "Convergence and space," Urban/Regional 0311002, University Library of Munich, Germany, revised 16 Nov 2003.
    21. Vidhi Chhaochharia & George M. Korniotis & Alok Kumar, 2020. "Prozac for depressed states? Effect of mood on local economic recessions," Review of Financial Economics, John Wiley & Sons, vol. 38(2), pages 245-274, April.
    22. Paul Cheshire & Stefano Magrini, 2005. "Analysing Growth and Distribution Dynamics - Isolating Divergence Factors," ERSA conference papers ersa05p749, European Regional Science Association.

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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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