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Regional Dimensions of the Australian Business Cycle

  • Robert Dixon
  • David Shepherd

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.

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File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0007/801178/1088.pdf
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Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1088.

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Length: 32 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:mlb:wpaper:1088
Contact details of provider: Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia
Phone: +61 3 8344 5355
Fax: +61 3 8344 6899
Web page: http://www.economics.unimelb.edu.au
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  1. Dixon, R. & Shepherd, D., 2000. "Trends and Cycles in Australian State and Territory Unemployment Rates," Department of Economics - Working Papers Series 730, The University of Melbourne.
  2. Perron, P., 1994. "Further Evidence on Breaking Trend Functions in Macroeconomic Variables," Cahiers de recherche 9421, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. David Norman & Thomas Walker, 2007. "Co-Movement Of Australian State Business Cycles ," Australian Economic Papers, Wiley Blackwell, vol. 46(4), pages 360-374, December.
  4. Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc.
  5. Dixon, R. & Shepherd, D. & Thomson, J., 2000. "Regional Unemployment Disparities," Department of Economics - Working Papers Series 737, The University of Melbourne.
  6. Jean Imbs, 2003. "Trade, Finance, Specialization, and Synchronization," IMF Working Papers 03/81, International Monetary Fund.
  7. Ansgar BELKE & Jens H. HEINE, . "Specialisation Patterns and the Synchronicity of Regional Employment Cycles in Europe," EcoMod2004 330600020, EcoMod.
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  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. 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.
  14. Fatás, Antonio, 1997. "EMU: Countries or Regions? Lessons from the EMS Experience," CEPR Discussion Papers 1558, C.E.P.R. Discussion Papers.
  15. 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.
  16. Abadir, Karim & Talmain, Gabriel, 2002. "Aggregation, Persistence and Volatility in a Macro Model," Review of Economic Studies, Wiley Blackwell, vol. 69(4), pages 749-79, October.
  17. Perron, P., 1989. "Testing For A Unit Root In A Time Series With A Changing Mean," Papers 347, Princeton, Department of Economics - Econometric Research Program.
  18. BARRIOS, Salvador & DE LUCIO, Juan José, . "Economic integration and regional business cycles: evidence from the Iberian regions," CORE Discussion Papers RP -1655, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  19. 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.
  20. Arthur Grimes, 2005. "Regional and Industry Cycles in Australasia: Implications for a Common Currency," Macroeconomics 0509020, EconWPA.
  21. 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.
  22. Todd E. Clark & Eric van Wincoop, 1999. "Borders and business cycles," Research Working Paper 99-07, Federal Reserve Bank of Kansas City.
  23. Salvador BARROS & Marius BRÜLHART & Robert J.R. ELLIOTT & Marianne SENSIER, 2001. "A Tale of Two Cycles: Co-Fluctuations Between UK Regions and the Euro Zone," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 01.10, Université de Lausanne, Faculté des HEC, DEEP.
  24. Ron Martin, 1997. "Regional Unemployment Disparities and their Dynamics," Regional Studies, Taylor & Francis Journals, vol. 31(3), pages 237-252.
  25. 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.
  26. Robert Dixon & David Shepherd & James Thomson, 2001. "Regional Unemployment Disparities in Australia," Regional Studies, Taylor & Francis Journals, vol. 35(2), pages 93-102.
  27. 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 365-73, July.
  28. Alain Noullez & Alessandra Iacobucci, 2004. "A Frequency-selective Filter for Short-Length Time Series," Computing in Economics and Finance 2004 128, Society for Computational Economics.
  29. 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, 03.
  30. 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.
  31. Ernst Juerg Weber, 2004. "Monetary Policy in a Heterogeneous Monetary Union: The Australian Experience," Economics Discussion / Working Papers 04-08, The University of Western Australia, Department of Economics.
  32. Engle, Robert F & Kozicki, Sharon, 1993. "Testing for Common Features: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(4), pages 393-95, October.
  33. Michel Beine & Serge Coulombe, 2003. "Regional Perspectives on Dollarization in Canada," Journal of Regional Science, Wiley Blackwell, vol. 43(3), pages 541-570.
  34. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  35. 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.
  36. 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 120-32, January.
  37. 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.
  38. David Shepherd & Robert Dixon, 2002. "The Relationship Between Regional and National Unemployment," Regional Studies, Taylor & Francis Journals, vol. 36(5), pages 469-480.
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