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Business cycle patterns in European regions

Author

Listed:
  • Gomez-Loscos, Ana
  • Gadea, M. Dolores
  • Bandres, Eduardo

Abstract

The aim of this paper is threefold. First, we analyze the comovements of the business cycles of European regions. Second, we date these business cycles, for the first time in the literature, and identify clusters of regions with similar business cycle behavior, using Finite Mixture Markov models. Third, we develop a new index to measure within-country homogeneity. We find that comovement among regions is, on average, quite low, although it increased during the convergence process prior to the euro cash changeover and after the onset of the Great Recession. We identify five different groups of European regions. We also find heterogeneity in the size of border effects.

Suggested Citation

  • Gomez-Loscos, Ana & Gadea, M. Dolores & Bandres, Eduardo, 2018. "Business cycle patterns in European regions," MPRA Paper 83964, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:83964
    as

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    File URL: https://mpra.ub.uni-muenchen.de/83964/1/MPRA_paper_83964.pdf
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    References listed on IDEAS

    as
    1. Fatas, Antonio, 1997. "EMU: Countries or regions? Lessons from the EMS experience," European Economic Review, Elsevier, vol. 41(3-5), pages 743-751, April.
    2. repec:eee:ecolet:v:162:y:2018:i:c:p:171-176 is not listed on IDEAS
    3. Eduardo Bandrés & María Dolores Gadea-Rivas & Ana Gómez-Loscos, 2017. "Regional business cycles across europe," Occasional Papers 1702, Banco de España;Occasional Papers Homepage.
    4. Maria Gadea & Ana Gómez-Loscos & Antonio Montañés, 2012. "Cycles inside cycles: Spanish regional aggregation," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(4), pages 423-456, December.
    5. Salvador Barrios & Marius Br¸lhart & 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.
    6. Francesca Marino, 2013. "Regional fluctuations and national cohesion in the EU12: a pre-Maastricht assessment," SERIES 0048, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Aug 2013.
    7. Dolores Gadea-Rivas, M. & Gómez-Loscos, Ana & Bandrés, Eduardo, 2018. "Clustering regional business cycles," Economics Letters, Elsevier, vol. 162(C), pages 171-176.
    8. Owyang, Michael T. & Piger, Jeremy M. & Wall, Howard J. & Wheeler, Christopher H., 2008. "The economic performance of cities: A Markov-switching approach," Journal of Urban Economics, Elsevier, vol. 64(3), pages 538-550, November.
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    11. Gerhard Bry & Charlotte Boschan, 1971. "Foreword to "Cyclical Analysis of Time Series: Selected Procedures and Computer Programs"," NBER Chapters,in: Cyclical Analysis of Time Series: Selected Procedures and Computer Programs, pages -1 National Bureau of Economic Research, Inc.
    12. Michael T. Owyang & Jeremy Piger & Howard J. Wall, 2005. "Business Cycle Phases in U.S. States," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 604-616, November.
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    17. Harding, Don & Pagan, Adrian, 2002. "Dissecting the cycle: a methodological investigation," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 365-381, March.
    18. Sylvia Kaufmann, 2010. "Dating and forecasting turning points by Bayesian clustering with dynamic structure: a suggestion with an application to Austrian data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(2), pages 309-344.
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    More about this item

    Keywords

    Business cycle dating; comovements; clusters; regions; Finite Mixture Markov models.;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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