Comparisons of Business Cycles in the EC: Idiosyncracies and Regularities

Christodoulakis, Nicos; Dimelis, Sophia; Kollintzas, Tryphon

doi:10.2307/2554774

“…The evidence in favour of a decreasing synchronicity of regional employment cycles is implicitly backed by other studies with a regional focus (Fatás, 1997, Clark andWincoop, 2001). This result is in contrast to many studies with a national focus (e.g., Barrios et al, 2001) which indicate an increasingly closer correlation of national business cycles between countries which are now members of EMU (e.g., Artis andZhang, 1997 andChristodoulakis et al, 1995). In section 2 we called this a puzzle which is likely to be of fundamental importance in driving the r esults and is also important for the context in which we see this contribution.…”

Section: Discussionmentioning

confidence: 75%

Specialisation patterns and the synchronicity of regional employment cycles in Europe

Belke

¹

,

Heine²

2006

IEEP

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This paper examines the degree of correlation of EU regional employment cycles and attempts to show whether these cycles reflect changing patterns of specialisation. By focusing on the regional level and by employing three different indicators of similarity of sectoral structure, it improves on existing studies. A dynamic panel data model is estimated pairs of regions by within groups, i.e., by a standard fixed effects estimator. Special attention is paid to capture the rich dynamics which are typical of employment data. The key finding is that employment growth is more synchronised when regions look alike in their sectoral structure. JEL Classification:E32, F15, R23

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“…Second, production is more volatile than sales. These two findings have been confirmed by Blinder and Maccini (1991), Hornstein (1998), Dimelis (2001), and Wen (2005) for the US, by Chikán and Tátrai (2003), Wen (2005), Chikán et al (2005), and Chikán and Kovács (2009) for OECD countries, by Wilkinson (1989), Christodoulakis et al (1995), and Dimelis (2001) for EU countries and by Chikán and Horváth (1999) for a group of 88 developed and developing countries. A recent strand of the literature including Carpenter et al (1998), Guariglia (1999), Brown and Haegler (2004), Bagliano and Sembenelli (2004), and Guariglia and Mateut (2010) rationalizes the procyclicality of inventory investment by linking the depletion of inventories to financing constraints which are rising during recessions and are becoming less binding during upswings.…”

Section: Introductionmentioning

confidence: 67%

Inventory Investment and Production in Europe: Is There a Pattern?

Abrahamsen

¹

,

Hartwig

²

2011

SSRN Journal

1

0

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Inventory investment is positively correlated with changes in production and follows the latter with a time-lag of two to three quarters. Therefore, there is no evidence that inventory investment either drives or smoothes the business cycle. Very few countries -Austria, Greece, Spain, and Switzerland -diverge from the typical pattern. This might hint to problems with respect to data quality. Terms of use: Documents in EconStor may Keywords:Inventory investment, production, business cycle, "Great Recession" in Europe IntroductionResearch on inventory investment can be sorted along the micro-macro divide or along the theory-empirics divide. Theoretical research is usually microeconomic in nature and integrates inventory investment into the firm's profit-maximization calculus. Two main theory blocks have ensued from this strand of the literature: the production-smoothing model and the (S, s) inventory model (see Blinder and Maccini, 1991, Hornstein, 1998, Ramey and West, 1999. The production smoothing model starts from the assumptions that production is subject to increasing marginal cost and that firms are facing exogenous demand shocks. In this case, firms minimize cost by smoothing production. Hence, this theory predicts production to be less volatile than sales, and inventory investment should be negatively correlated with sales.The (S, s) inventory theory assumes that firms holding inventories are non-producing firms that order goods from producers. The ordering firm faces a trade-off between the reduced perunit order cost of increasing order sizes and the foregone interest income of the higher funds needed to pay for larger order sizes. The optimal strategy is then to place an order whenever the level of inventories falls below a critical level s. The order lifts inventories to level S from which sales will reduce it again to level s and so on. If orders are equal to production it follows from this theory that production will be more volatile than sales.The second strand of the literature is concerned with the empirics of inventory investment and is predominantly macroeconomic in nature. It asks which patterns between inventory investment, production, and sales can be found in the data. This research has uncovered a number of -as Ramey and West ( 3That production is more volatile than sales speaks against the production-smoothing model, although Fair (1989) and Krane and Braun (1991) claim to be able to vindicate the latter showing that production is...

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“…See Hodrick and Prescott (1997). Apart from the protagonists themselves, Christodoulakis et al (1995), Razzak (2001) as well as Artis (2003), amongst many others, refer to the Hodrick Prescott-filter. We set the smoothing parameter to λ = 1600, as recommended for quarterly data, apply it to ln Y and refer to the de-logged filtered series as Y*.…”

Section: An Indicator For Cyclical Developmentmentioning

confidence: 99%

International Business Cycles: How Do They Relate to Switzerland?

Graff

¹

2011

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis paper first discusses concepts, definitions and theoretical explanations for international business cycles. This is followed by an overview of previous empirical studies. We then argue that for ex post analyses the output gap is a univariate quantification of the business cycle that is comparable across space and time and readily available (or rather computable from GFP series), which recommends its use for our purposes. Based on an unbalanced panel of quarterly output gap series in a panel of 40 countries from 1960q1 to 2011q3, we then test a number of hypotheses regarding the imbeddedness of the Swiss economy into international business cycles and possible changes thereof over the recent years. The results identify layers of international business cycles, where the integration of Switzerland is pronounced. Moreover it markedly deepened after 1994. A case for Switzerland being 'special' can hence not be made in terms of its recent business cycle pattern.

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Comparisons of Business Cycles in the EC: Idiosyncracies and Regularities

Cited by 115 publications

References 20 publications

Specialisation patterns and the synchronicity of regional employment cycles in Europe

Specialisation patterns and the synchronicity of regional employment cycles in Europe

Inventory Investment and Production in Europe: Is There a Pattern?

International Business Cycles: How Do They Relate to Switzerland?

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