Common and Spatial Drivers in Regional Business Cycles

14 Pages Posted: 7 Apr 2009

See all articles by Michael J. Artis

Michael J. Artis

University of Manchester - Institute for Political & Economic Governance (IPEG)

Christian Dreger

European University Viadrina Frankfurt (Oder); IZA Institute of Labor Economics; Chinese Academy of Social Sciences (CASS)

Konstantin A. Kholodilin

German Institute for Economic Research (DIW Berlin)

Date Written: March 2009

Abstract

We examine real business cycle convergence for 41 euro area regions and 48 US states. Results obtained by a panel model with spatial correlation indicate that the relevance of common business cycle factors is rather stable over the past two decades in the euro area and the US. Ongoing business cycle convergence often detected in cross-country data is not confirmed at the regional level. The degree of synchronization across the euro area is similar to that to be found for the US states. Thus, the lack of convergence does not seem to be an impediment to a common monetary policy.

Keywords: Business cycle convergence, Spatial correlation, spatial panel model

JEL Classification: C51, E32, E37

Suggested Citation

Artis, Michael J. and Dreger, Christian and Kholodilin, Konstantin A., Common and Spatial Drivers in Regional Business Cycles (March 2009). CEPR Discussion Paper No. DP7206, Available at SSRN: https://ssrn.com/abstract=1372526

Michael J. Artis (Contact Author)

University of Manchester - Institute for Political & Economic Governance (IPEG) ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Christian Dreger

European University Viadrina Frankfurt (Oder) ( email )

Frankfurt (Oder)
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Chinese Academy of Social Sciences (CASS) ( email )

Beijing, 100732
China

Konstantin A. Kholodilin

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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