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A Tale of Two Cycles: Co-Fluctuations Between UK Regions and the Euro Zone

  • Salvador BARROS
  • Marius BRÜLHART
  • Robert J.R. ELLIOTT
  • Marianne SENSIER

We examine the patterns and determinants of business-cycle correlations among eleven UK regions and six euro-zone countries over the 1966-1997 period, using GMM to allow for sampling error in comparing estimated correlations. The British business cycle is found to be persistently out of phase with that of the main euro-zone economies, and the trend is towards lower correlations. We detect only minor cyclical heterogeneity among UK regions. Differences in sectoral specialisation drive some of the asymmetry in GDP fluctuations, but they do not appear significant in explaining the observed reduction in UK-EU business-cycle correlations over time.

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Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 01.10.

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Length: 35 pages
Date of creation: Nov 2001
Date of revision:
Publication status: Published in The Manchester School, vol. 71 (3), Sept. 2002, pp. 265-292
Handle: RePEc:lau:crdeep:01.10
Contact details of provider: Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
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