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Regional business cycle synchronization in Europe?

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Abstract

We analyse regional business cycle synchronization in the Euro Area, using gross value added in 53 NUTS 1 regions for a period of 30 years (1975–2005), detrended by Hodrick–Prescott and the Christiano–Fitzgerald filters. We conclude that, on average, synchronization has increased for the period considered with exceptions during the eighties and the beginning of the nineties. Still, the correlation of the business cycle in some regions with the benchmark remained low or even decreased. Our findings also support the hypothesis of the existence of a ‘national border’ effect.

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Notes

  1. See Appendix for a detailed list of the regions and the codes assigned to them.

  2. Fatás (1997) and Barrios et al. (2002) have a sample running from 1966 to 1992, and 1966 to 1997, respectively.

  3. For a critique, we refer to Den Haan (2000).

  4. For instance, Artis and Zhang (1997, 1999) break their sample in two intervals corresponding with the period before and after the start of the ERM and conclude that business cycles have become more synchronized during the ERM phase. However, Inklaar and De Haan (2001) dispute this finding. See also Fatás (1997).

  5. See, for instance, Altavilla (2004) and Darvas et al. (2007).

  6. These conditions are similar to the “beta” and “sigma” convergence concepts used in the economic growth literature.

  7. This measure is called STRESS (standardized residual sum of squares).

  8. The region of Berlin (DE3) has been excluded from the graph because it was very far away from the others (four points).

  9. Regulation 1059/2003 of the European Parliament and the Council, of 26 May 2003 on the establishment of a common classification of territorial units for statistics (NUTS).

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Authors and Affiliations

  1. College of Europe, Brugge, Belgium

    Lourdes Acedo Montoya & Jakob de Haan

  2. Faculty of Economics and Business, University of Groningen, P.O. Box 800, 9700, AV Groningen, The Netherlands

    Jakob de Haan

  3. CESifo Munich, Munich, Germany

    Jakob de Haan

Authors
  1. Lourdes Acedo Montoya
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  2. Jakob de Haan
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Correspondence to Jakob de Haan.

Appendix: List of regions and codes

Appendix: List of regions and codes

The “Nomenclature of territorial Units for Statistics (NUTS)” subdivides the economic territory of the Member States into smaller units for statistical purposes, as defined in Decision 91/450/EEC. The classification is hierarchical and based on a population threshold. Therefore, NUTS do not necessarily coincide with existing administrative units.Footnote 9

Table 2
Full size table

Although statistical analysis has been substantially simplified, the NUTS classification has changed over time which makes obtaining long and homogeneous series difficult.

1.1 List of regions and codes used for the empirical analysis (NUTS1)

Table 3
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Montoya, L.A., de Haan, J. Regional business cycle synchronization in Europe?. Int Econ Econ Policy 5, 123–137 (2008). https://doi.org/10.1007/s10368-008-0106-z

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