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A Tale of Two Cycles: Co‐Fluctuations Between UK Regions and the Euro Zone

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  • Salvador Barrios
  • Marius Brülhart
  • Robert J.R. Elliott
  • Marianne Sensier

Abstract

We examine the patterns and determinants of business cycle correlations among 11 UK regions and six euro‐zone countries over the 1966–97 period, using the generalized method of moments 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 specialization 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.

Suggested Citation

  • Salvador Barrios & Marius Brülhart & Robert J.R. Elliott & Marianne Sensier, 2003. "A Tale of Two Cycles: Co‐Fluctuations Between UK Regions and the Euro Zone," Manchester School, University of Manchester, vol. 71(3), pages 265-292, June.
    • Handle: RePEc:bla:manchs:v:71:y:2003:i:3:p:265-292
    DOI: 10.1111/1467-9957.00346
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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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