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Do Business-related Services Really Lag Behind Manufacturing Industries in the Business Cycle? Empirical Evidence on the Lead/Lag Relationship Between Business-related Services and Manufacturing Industries for Germany

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  • Kaiser, Ulrich
  • Voß, Katrin

Abstract

In an a priori view, it is usually assumed that the business cycle of manufacturing industries leads the business cycle of the service sector. This seems to be even more plausible for the relationship between business-related services, whose high growth rates in recent years were largely due to increased outsourcing activities of the manufacturing sector. In this paper it is shown that the relationship is not as simple as it appears at first sight. We run Granger causality tests between sales growth rates of the business-related service sector against growth rates of various series of the manufacturing sector. It turns out that the relationship between business-related services and manufacturing is either contemporaneous or bi-directional, while no evidence is given for manufacturing leading business-related services.

Suggested Citation

  • Kaiser, Ulrich & Voß, Katrin, 1999. "Do Business-related Services Really Lag Behind Manufacturing Industries in the Business Cycle? Empirical Evidence on the Lead/Lag Relationship Between Business-related Services and Manufacturing Indus," ZEW Discussion Papers 99-34, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5276
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    References listed on IDEAS

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    1. Krämer, Hagen, 1999. "Dienstleistungen: Motor für Wachstum und Beschäftigung in Deutschland?," Violette Reihe: Schriftenreihe des Promotionsschwerpunkts "Globalisierung und Beschäftigung" 5/1999, University of Hohenheim, Carl von Ossietzky University Oldenburg, Evangelisches Studienwerk.
    2. Klodt, Henning & Maurer, Rainer & Schimmelpfennig, Axel, 1997. "Tertiarisierung in der deutschen Wirtschaft," Open Access Publications from Kiel Institute for the World Economy 959, Kiel Institute for the World Economy (IfW Kiel).
    3. Kaiser, Ulrich & Buscher, Herbert S., 1999. "The Service Sentiment Indicator - A Business Climate Indicator for the German Business - Related Services Sector," CoFE Discussion Papers 99/06, University of Konstanz, Center of Finance and Econometrics (CoFE).
    4. Layton, Allan P & Moore, Geoffrey H, 1989. "Leading Indicators for the Service Sector," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(3), pages 379-386, July.
    5. Morrison, Catherine J, 1986. "Structural Models of Dynamic Factor Demands with Nonstatic Expectations: An Empirical Assessment of Alternative Expectations Specifications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 365-386, June.
    6. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    7. Carlson, John A & Parkin, J Michael, 1975. "Inflation Expectations," Economica, London School of Economics and Political Science, vol. 42(166), pages 123-138, May.
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    Cited by:

    1. Kaiser, Ulrich, 2001. "Moving in and out of financial distress: evidence for newly founded service sector firms," ZEW Discussion Papers 01-09, ZEW - Leibniz Centre for European Economic Research.

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    More about this item

    Keywords

    business cycle; Granger causality; business-related services;
    All these keywords.

    JEL classification:

    • 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

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