IDEAS home Printed from https://ideas.repec.org/p/mlb/wpaper/1088.html
   My bibliography  Save this paper

Regional Dimensions of the Australian Business Cycle

Author

Listed:
  • Robert Dixon
  • David Shepherd

Abstract

This paper deals with the identification of, and explanations for, co-movement in regional business cycles using data for Australian states and territories (regions). We show that both raw growth rates and the deviations from a Hodrick-Prescott trend reflect noise in the series as well as any cycle but that it is possible to manipulate the deviations from a Hodrick-Prescott trend in a simple way so as to reveal its cyclical component. We measure the extent of co-movements in employment fluctuations amongst the regions. We find that cross-region correlations in employment cycles can be explained by regional industry structure and size while the noise component of regional fluctuations appears instead to be related to physical geography.

Suggested Citation

  • Robert Dixon & David Shepherd, 2009. "Regional Dimensions of the Australian Business Cycle," Department of Economics - Working Papers Series 1088, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:1088
    as

    Download full text from publisher

    File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0007/801178/1088.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
    2. Fatas, Antonio, 1997. "EMU: Countries or regions? Lessons from the EMS experience," European Economic Review, Elsevier, vol. 41(3-5), pages 743-751, April.
    3. Ernst Juerg Weber, 2006. "Monetary policy in a heterogeneous monetary union: the Australian experience," Applied Economics, Taylor & Francis Journals, vol. 38(21), pages 2487-2495.
    4. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
    5. Jordi Pons-Novell & Daniel Tirado-Fabregat, 2006. "Specialization and asymmetries in macroeconomic fluctuations: Evidence for the European regions," Regional Studies, Taylor & Francis Journals, vol. 40(7), pages 695-706.
    6. Lourdes Montoya & Jakob Haan, 2008. "Regional business cycle synchronization in Europe?," International Economics and Economic Policy, Springer, vol. 5(1), pages 123-137, July.
    7. Ron Martin, 1997. "Regional Unemployment Disparities and their Dynamics," Regional Studies, Taylor & Francis Journals, vol. 31(3), pages 237-252.
    8. Salvador Barrios & Juan José de Lucio, 2003. "Economic Integration and Regional Business Cycles: Evidence from the Iberian Regions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(4), pages 497-515, September.
    9. Salvador Barrios & Marius Brülhart & Robert J.R. Elliott & Marianne Sensier, 2003. "A Tale of Two Cycles: Co‐Fluctuations Between UK Regions and the Euro Zone," Manchester School, University of Manchester, vol. 71(3), pages 265-292, June.
    10. Jean Imbs, 2004. "Trade, Finance, Specialization, and Synchronization," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 723-734, August.
    11. David Shepherd & Robert Dixon, 2008. "The Cyclical Dynamics and Volatility of Australian Output and Employment," The Economic Record, The Economic Society of Australia, vol. 84(264), pages 34-49, March.
    12. Martin Robson, 2006. "Sectoral shifts, employment specialization and the efficiency of matching: An analysis using UK regional data," Regional Studies, Taylor & Francis Journals, vol. 40(7), pages 743-754.
    13. Grimes, Arthur, 2005. "Regional and industry cycles in Australasia: Implications for a common currency," Journal of Asian Economics, Elsevier, vol. 16(3), pages 380-397, June.
    14. Blackburn, Keith & Ravn, Morten O, 1992. "Business Cycles in the United Kingdom: Facts and Fictions," Economica, London School of Economics and Political Science, vol. 59(236), pages 383-401, November.
    15. David Shepherd & Robert Dixon, 2002. "The Relationship Between Regional and National Unemployment," Regional Studies, Taylor & Francis Journals, vol. 36(5), pages 469-480.
    16. Ron Martin & Peter Tyler, 2000. "Regional Employment Evolutions in the European Union: A Preliminary Analysis," Regional Studies, Taylor & Francis Journals, vol. 34(7), pages 601-616, October.
    17. Andrew C. Harvey & Thomas M. Trimbur, 2003. "General Model-Based Filters for Extracting Cycles and Trends in Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 244-255, May.
    18. Clark, Todd E. & van Wincoop, Eric, 2001. "Borders and business cycles," Journal of International Economics, Elsevier, vol. 55(1), pages 59-85, October.
    19. Artis, Michael J & Zhang, Wenda, 1999. "Further Evidence on the International Business Cycle and the ERM: Is There a European Business Cycle?," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 120-132, January.
    20. Engle, Robert F & Kozicki, Sharon, 1993. "Testing for Common Features," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(4), pages 369-380, October.
    21. Michel Beine & Serge Coulombe, 2003. "Regional Perspectives on Dollarization in Canada," Journal of Regional Science, Wiley Blackwell, vol. 43(3), pages 541-570, August.
    22. Leybourne, Stephen J. & C. Mills, Terence & Newbold, Paul, 1998. "Spurious rejections by Dickey-Fuller tests in the presence of a break under the null," Journal of Econometrics, Elsevier, vol. 87(1), pages 191-203, August.
    23. David Norman & Thomas Walker, 2007. "Co‐Movement Of Australian State Business Cycles," Australian Economic Papers, Wiley Blackwell, vol. 46(4), pages 360-374, December.
    24. Engle, Robert F & Kozicki, Sharon, 1993. "Testing for Common Features: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(4), pages 393-395, October.
    25. Poncet, Sandra & Barthélemy, Jean, 2008. "China as an Integrated Area?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 896-926.
    26. Robert Dixon & David Shepherd, 2001. "Trends and Cycles in Australian State and Territory Unemployment Rates," The Economic Record, The Economic Society of Australia, vol. 77(238), pages 252-269, September.
    27. Artis, Michael J & Zhang, W, 1997. "International Business Cycles and the ERM: Is There a European Business Cycle?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 2(1), pages 1-16, January.
    28. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    29. Gomez, Victor, 2001. "The Use of Butterworth Filters for Trend and Cycle Estimation in Economic Time Series," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(3), pages 365-373, July.
    30. Perron, Pierre, 1997. "Further evidence on breaking trend functions in macroeconomic variables," Journal of Econometrics, Elsevier, vol. 80(2), pages 355-385, October.
    31. Alessandra Iacobucci & Alain Noullez, 2005. "A Frequency Selective Filter for Short-Length Time Series," Computational Economics, Springer;Society for Computational Economics, vol. 25(1), pages 75-102, February.
    32. Karim Abadir & Gabriel Talmain, 2002. "Aggregation, Persistence and Volatility in a Macro Model," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 749-779.
    33. Perron, Pierre, 1990. "Testing for a Unit Root in a Time Series with a Changing Mean," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(2), pages 153-162, April.
    34. Ansgar Belke & Jens Heine, 2006. "Specialisation patterns and the synchronicity of regional employment cycles in Europe," International Economics and Economic Policy, Springer, vol. 3(2), pages 91-104, November.
    35. Robert Dixon & David Shepherd & James Thomson, 2001. "Regional Unemployment Disparities in Australia," Regional Studies, Taylor & Francis Journals, vol. 35(2), pages 93-102.
    36. Sebnem Kalemli-Ozcan & Bent E. Sorensen & Oved Yosha, 1999. "Industrial specialization and the asymmetry of shocks across regions," Research Working Paper 99-06, Federal Reserve Bank of Kansas City.
    37. Dixon, R. & Shepherd, D. & Thomson, J., 2000. "Regional Unemployment Disparities," Department of Economics - Working Papers Series 737, The University of Melbourne.
    38. Nicolaas Groenewold & A. J. Hagger, 2003. "Natural-rate Estimates for the Australian States: An SVAR Approach," Regional Studies, Taylor & Francis Journals, vol. 37(3), pages 251-263.
    39. Hess, Gregory D & Shin, Kwanho, 1997. "International and Intranational Business Cycles," Oxford Review of Economic Policy, Oxford University Press, vol. 13(3), pages 93-109, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gießler Stefan & Heinisch Katja & Holtemöller Oliver, 2021. "(Since When) Are East and West German Business Cycles Synchronised?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(1), pages 1-28, February.
    2. Celia Melguizo, 2017. "An analysis of Okun’s law for the Spanish provinces," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 37(1), pages 59-90, February.
    3. Liu, Dayu & Wang, Qiaoru & Song, Yang, 2020. "China’s business cycles at the provincial level: National synchronization, interregional coordination and provincial idiosyncrasy," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 629-650.
    4. Inga Ivanova & Oivind Strand & Loet Leydesdorff, 2019. "The Synergy and Cycle Values in Regional Innovation Systems: The Case of Norway," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 13(1), pages 48-61.
    5. Rachidi Kotchoni & Dalibor Stevanovic & Stéphane Surprenant, 2019. "Identification des points de retournement du cycle économique au Canada," CIRANO Project Reports 2019rp-05, CIRANO.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Shepherd & Robert Dixon, 2010. "The not-so-great moderation? Evidence on changing volatility from Australian regions," Department of Economics - Working Papers Series 1090, The University of Melbourne.
    2. David Shepherd & Robert Dixon, 2008. "The Cyclical Dynamics and Volatility of Australian Output and Employment," The Economic Record, The Economic Society of Australia, vol. 84(264), pages 34-49, March.
    3. Ageliki Anagnostou & Ioannis Panteladis & Maria Tsiapa, 2015. "Disentangling different patterns of business cycle synchronicity in the EU regions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(3), pages 615-641, August.
    4. Kapounek, Svatopluk & Kučerová, Zuzana, 2019. "Historical decoupling in the EU: Evidence from time-frequency analysis," International Review of Economics & Finance, Elsevier, vol. 60(C), pages 265-280.
    5. Hasan Engin Duran, 2015. "Dynamics of Business Cycle Synchronization in Turkey," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(5), pages 581-606, December.
    6. Christian Volpe Martincus & Andrea Molinari, 2007. "Regional Business Cycles and National Economic Borders: What Are the Effects of Trade in Developing Countries?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(1), pages 140-178, April.
    7. Gabriele Tondl & Iulia Traistaru-Siedschlag, 2006. "Regional growth cycle synchronisation with the Euro Area," Papers WP173, Economic and Social Research Institute (ESRI).
    8. Alexandra Ferreira-Lopes & Álvaro Pina, 2011. "Business Cycles, Core, and Periphery in Monetary Unions: Comparing Europe and North America," Open Economies Review, Springer, vol. 22(4), pages 565-592, September.
    9. Chen, Xiaoshan & Mills, Terence C., 2009. "Evaluating growth cycle synchronisation in the EU," Economic Modelling, Elsevier, vol. 26(2), pages 342-351, March.
    10. Clark, Todd E. & van Wincoop, Eric, 2001. "Borders and business cycles," Journal of International Economics, Elsevier, vol. 55(1), pages 59-85, October.
    11. Robert Dixon & David Shepherd, 2001. "Trends and Cycles in Australian State and Territory Unemployment Rates," The Economic Record, The Economic Society of Australia, vol. 77(238), pages 252-269, September.
    12. Matteo Lanzafame, 2010. "The nature of regional unemployment in Italy," Empirical Economics, Springer, vol. 39(3), pages 877-895, December.
    13. Gadea-Rivas, María Dolores & Gómez-Loscos, Ana & Leiva-Leon, Danilo, 2019. "Increasing linkages among European regions. The role of sectoral composition," Economic Modelling, Elsevier, vol. 80(C), pages 222-243.
    14. Gatfaoui, Jamel & Girardin, Eric, 2015. "Comovement of Chinese provincial business cycles," Economic Modelling, Elsevier, vol. 44(C), pages 294-306.
    15. Viv Hall & John McDermott, 2008. "An Unobserved Components Common Cycle For Australia? Implications For A Common Currency," CAMA Working Papers 2008-11, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    16. Jürgen Bierbaumer-Polly & Peter Huber & Petr Rozmahel, 2015. "The Impact of EU Accession on Regional Business Cycle Synchronisation and Sector Specialisation," WIFO Working Papers 494, WIFO.
    17. Chang, Koyin & Kim, Yoonbai & Tomljanovich, Marc & Ying, Yung-Hsiang, 2013. "Do political parties foster business cycles? An examination of developed economies," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 212-226.
    18. Konstantakopoulou, Ioanna & Tsionas, Efthymios G., 2014. "Half a century of empirical evidence of business cycles in OECD countries," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 389-409.
    19. Mathy, Gabriel P. & Meissner, Christopher M., 2011. "Business cycle co-movement: Evidence from the Great Depression," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 362-372.
    20. Bergman, Michael, 2004. "How Similar Are European Business Cycles?," Working Papers 2004:9, Lund University, Department of Economics.

    More about this item

    Keywords

    Regional Employment; Business Cycles; Autoregressive Modelling; Co-Movement;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:1088. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/demelau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dandapani Lokanathan (email available below). General contact details of provider: https://edirc.repec.org/data/demelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.