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WHAT DRIVES REGIONAL BUSINESS CYCLES? THE ROLE OF COMMON AND SPATIAL COMPONENTS *
Author(s) -
ARTIS MICHAEL,
DREGER CHRISTIAN,
KHOLODILIN KONSTANTIN
Publication year - 2011
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2010.02214.x
Subject(s) - business cycle , convergence (economics) , economics , european monetary union , panel data , monetary policy , synchronization (alternating current) , macroeconomics , economic geography , monetary economics , international economics , econometrics , computer science , computer network , channel (broadcasting)
We examine real business cycle convergence for 41 euro area regions and 48 US states. The results obtained by a panel model with spatial effects indicate that the impact of national business cycles has been rather stable over the past two decades. A tendency for convergence in business cycles often detected in country data is not confirmed at the regional level. The pattern of synchronization across the euro area is similar to that across US states. Although cyclical heterogeneity is detected, it does not indicate a serious impediment to a common monetary policy of the European Central Bank.