Business cycle synchronization across U.S. states (original) (raw)
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Optimal currency area and business cycle synchronization across U.S. states
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We use wavelet analysis to investigate to what extent individual U.S. states' business cycles are synchronized. The results show that the U.S. states are remarkably well synchronized compared to the previous findings w.r.t. the Euro Area. There is also a strong and significant correlation between business cycle dissimilitudes and the distance between each pair of states, consistent to gravity type mechanisms where distance affects trade. Trade, in turn, increases business cycle synchronization. Finally we show that a higher degree of industry specialization is associated with a higher dissimilitude of the state cycle with the aggregate economy.
Business cycle synchronization among the US states: spatial effects and regional determinants
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This electronic supplementary material collects results and analyses not included in the main paper to save space. A Results based on the BK filter and rook-contiguity spatial weight matrix This Appendix reports the results obtained considering the synchronization indicators based on the BK filter (Baxter and King, 1999) and the specification of the spatial weight matrix based on the rook contiguity criterion.
Business cycle dynamics across the US states
The B.E. Journal of Macroeconomics, 2013
The analysis of synchronization among regional or national business cycles has recently been attracting a growing interest within the economic literature. Far less attention has instead been devoted to a closely related issue: given a certain level of synchronization, some economies might be systematically ahead of others along the swings of the business cycle. We analyze this issue within a system of economies and show that leading (or lagging behind) is a feature that does not occur at random across the economies. In addition, we investigate the economic drivers that could explain this behavior. To do so, we employ data for 48 conterminous US states between 1990 and 2009.
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We employ a wavelet spectrum analysis to study globalization and business cycles in China and G7 countries. The co-movement synchronization between G7 countries and China is shown to have undergone frequent and large changes during our sample period. The co-movements for business cycle frequencies are generally different from those for other frequencies, and synchronization with China's business cycle differs as between G7 countries. In recent years Japan, Germany and Italy seem to have the closest synchronization at business-cycle frequency. We find a significant relationship between the timevarying wavelet measure of synchronization and trade only for business-cycle frequencies. The co-movements at longer frequencies are negatively related to trade, so that the overall co-movements and trade tend not to be significantly related.
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arXiv (Cornell University), 2020
Two decades of studies have found significant regional differences in the timing of transitions in national business cycles and their durations. Earlier studies partly detect regional synchronization during business cycle expansions and contractions in Europe, the United States, and Japan. We examine this possibility applying a sophisticated method for identifying the time-varying degree of synchronization to regional business cycle data in the U.S. and Japan. The method is prominent in nonlinear sciences but has been infrequently applied in business cycle studies. We find that synchronization in regional business cycles increased during contractions and decreased during expansions throughout the period under study. Such asymmetry between the contraction and expansion phases of a business cycle will contribute our better understanding of the phenomenon of business cycles.