Abstract for CGBCR Discussion Paper 3
‘A Tale of Two Cycles: Co-fluctuations Between UK Regions and the Euro Zone’
Salvador Barrios, Marius Brülhart, Robert J.R. Elliott and Marianne Sensier
September 2002, Centre for Growth and Business Cycle Research Discussion Paper Series, University of Manchester, No. 3. Download PDF file (1120KB).
We examine the patterns and determinants of business-cycle correlations among eleven UK regions and six euro-zone countries over the 1966-1997 period, using GMM to allow for sampling error in comparing estimated correlations. The British business cycle is found to be persistently out of phase with that of the main euro-zone economies, and the trend is towards lower correlations. We detect only minor cyclical heterogeneity among UK regions. Differences in sectoral specialisation drive some of the asymmetry in GDP fluctuations, but they do not appear significant in explaining the observed reduction in UK-EU business-cycle correlations over time.