Munich Personal RePEc Archive

Business cycle patterns in European regions

Gomez-Loscos, Ana and Gadea, M. Dolores and Bandres, Eduardo (2018): Business cycle patterns in European regions.

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Abstract

The aim of this paper is threefold. First, we analyze the comovements of the business cycles of European regions. Second, we date these business cycles, for the first time in the literature, and identify clusters of regions with similar business cycle behavior, using Finite Mixture Markov models. Third, we develop a new index to measure within-country homogeneity. We find that comovement among regions is, on average, quite low, although it increased during the convergence process prior to the euro cash changeover and after the onset of the Great Recession. We identify five different groups of European regions. We also find heterogeneity in the size of border effects.

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