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Determinants of regional business cycle synchronization in Greece

Author

Listed:
  • Panagiotis Delis

    (Bank of Greece)

  • Stavros Degiannakis

    (Bank of Greece and Panteion University of Social and Political Sciences)

  • George Filis

    (University of Patras)

  • Theodosios Palaskas

    (Panteion University of Social and Political Sciences)

  • Chrysostomos Stoforos

    (Panteion University of Social and Political Sciences)

Abstract

We assess the determinants of regional business cycles synchronization in Greece vis-Ã -vis the national reference business cycle, using NUTSII annual data. The computation of the time-varying synchronization is based on the dynamic estimate of a conditional variance-covariance model and subsequently a panel regression model is used to evaluate its determinants. The findings show that island regions, industrial structure, imports, savings and disposable income are the key determinants, based on the GVA business cycle synchronization vis-Ã -vis the national reference cycle. We also assess the determinants of employment synchronization (vis-Ã -vis the national employment level) and we find that regions with higher disposable income and public spending tend to drive the level of synchronization. Turning to the inter-regional synchronization we provide evidence that investments, disposable income and employment drive the GVA business cycle synchronization, whereas the employment synchronization is determined by the level of imports, disposable income and public spending, as well as, by the status of regions as island economies. We further show that the Greek economic crisis during the period 2010-2018 has dimished or eliminated the effects of the aforementioned drivers, suggesting that during the said period, sychronisation was mainly driven by the wider economic conditions. These findings lead to important policy implications, which are thoroughly discussed.

Suggested Citation

  • Panagiotis Delis & Stavros Degiannakis & George Filis & Theodosios Palaskas & Chrysostomos Stoforos, 2024. "Determinants of regional business cycle synchronization in Greece," Working Papers 329, Bank of Greece.
  • Handle: RePEc:bog:wpaper:329
    DOI: 10.52903/wp2024329
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    More about this item

    Keywords

    Business Cycle; Employment; Synchronization; Dynamic Correlation.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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