Title: Regional business cycles in Europe: Dating and clustering
Authors: Ana Gomez-Loscos - Bank of Spain (Spain)
Eduardo Bandres - Universidad de Zaragoza (Spain) [presenting]
Lola Gadea - University of Zaragoza (Spain)
Abstract: The aim is threefold. First, we examine the business cycles of European regions and the comovements among them. Second, using Finite Mixture Markov models, we compute regional business cycle datings that allow us to identify clusters of European regions that show similar business cycle features. Third, we develop a new index to measure within-country homogeneity. We find that comovements among regions is, on average, quite low. However, we find a progressive increase of the spatial correlation during the convergence process and a sharp rise during the Great Recession. We identify five different groups of European regions: a Greek group, a southern Germany group, a core group, a northern group and the largest group, which encompasses the rest of the regions. We also find sizable border effects.