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Business Cycle (business + cycle)
Kinds of Business Cycle Terms modified by Business Cycle Selected AbstractsSTOCK RETURNS, ASYMMETRIC VOLATILITY, RISK AVERSION, AND BUSINESS CYCLE: SOME NEW EVIDENCEECONOMIC INQUIRY, Issue 2 2008SEI-WAN KIM We study how three interrelated phenomena,excess stock returns and risk relation, risk aversion, and asymmetric volatility movement,change over business cycles. Using an asymmetric generalized autoregressive conditional heteroskedasticity in mean model and a Markov switching model, we find that excess stock return increases and asymmetric volatility movement is weakened during boom periods. This suggests that investors become more risk-averse during boom periods (i.e., procyclical risk aversion), which we confirm using a calibration of a simple equilibrium model. (JEL C32, E32, G12) [source] FISCAL DECENTRALIZATION AND THE BUSINESS CYCLE: AN EMPIRICAL STUDY OF SEVEN FEDERATIONSECONOMICS & POLITICS, Issue 1 2010JONATHAN RODDEN Although fiscal policies of central governments sometimes provide modest insurance against regional income shocks, this paper shows that procyclical fiscal policy among provincial governments can easily overwhelm these stabilizing effects. We examine the cyclicality of budget items among provincial governments in seven federations, showing that own-source taxes are generally highly procyclical, and contrary to common wisdom, revenue sharing and discretionary transfers are either acyclical or procyclical. Constituent governments are thus left alone to smooth their own shocks, and we document the extent to which various restraints on borrowing and saving undermine their ability to do so. The resulting procyclicality of provincial fiscal policy is likely to have important implications in a world where demands for countercyclical fiscal policy are increasing but considerable fiscal responsibilities are being devolved to subnational governments. [source] HOUSING AND THE BUSINESS CYCLE*INTERNATIONAL ECONOMIC REVIEW, Issue 3 2005Morris A. Davis In the United States, the percentage standard deviation of residential investment is more than twice that of nonresidential investment. In addition, GDP, consumption, and both types of investment co-move positively. We reproduce these facts in a calibrated multisector growth model where construction, manufacturing, and services are combined, in different proportions, to produce consumption, business investment, and residential structures. New housing requires land in addition to new structures. The model can also account for important features of industry-level data. In particular, hours and output in all industries are positively correlated, and are most volatile in construction. [source] UNEMPLOYMENT DURATION, BENEFIT DURATION AND THE BUSINESS CYCLETHE ECONOMIC JOURNAL, Issue 479 2002Olympia Bover In this paper we study the effects of unemployment benefit duration and the business cycle on unemployment duration. We construct durations for individuals entering unemployment from a longitudinal sample of Spanish men in 1987,94. Estimated discrete hazard models indicate that receipt of unemployment benefits significantly reduces the hazard of leaving unemployment. At durations of three months, when the largest effects occur, the hazard for workers without benefits is twice as large as that for workers with benefits. Favourable business conditions increase the hazard of leaving unemployment. At sample-period magnitudes, this effect is significantly smaller than that of benefit receipt. [source] WILL BUSINESS CYCLES IN THE EURO AREA CONVERGE?JOURNAL OF ECONOMIC SURVEYS, Issue 2 2008A CRITICAL SURVEY OF EMPIRICAL RESEARCH Abstract This survey of business cycle synchronization in the European monetary union focuses on two issues: have business cycles become more similar, and which factors drive business cycle synchronization. We conclude that business cycles in the euro area have gone through periods of both convergence and divergence. Still, there is quite some evidence that during the 1990s business cycle synchronization in the euro area has increased. Higher trade intensity is found to lead to more synchronization, but the point estimates vary widely. The evidence for other factors affecting business cycle synchronization is very mixed. [source] PRODUCTIVITY AND BUSINESS CYCLES IN JAPAN: EVIDENCE FROM JAPANESE INDUSTRY DATA,THE JAPANESE ECONOMIC REVIEW, Issue 2 2006T. MIYAGAWA Constructing a database of 37 industries, we examine whether the measured productivity in Japan is pro-cyclical and investigate the sources of this pro-cyclicality by using the production function approach employed by Hall (1990) and Basu and Fernald (1995). The aggregate Solow residual displays pro-cyclicality. A large number of industries show constant returns to scale. No significant evidence for the presence of thick-market externalities is found. Our results also hold when we consider labour hoarding, part-time employment, and the adjustment cost of investment. The results indicate that policies to revitalize the Japanese economy should concentrate on promoting productivity growth. [source] COMMENT: PRODUCTIVITY AND BUSINESS CYCLES IN JAPAN: EVIDENCE FROM JAPANESE INDUSTRY DATA,THE JAPANESE ECONOMIC REVIEW, Issue 2 2006TOMOYUKI NAKAJIMA First page of article [source] THE DECLINE IN THE VOLATILITY OF THE BUSINESS CYCLES IN THE UKTHE MANCHESTER SCHOOL, Issue 2008CHRISTINA V. ATANASOVA We analyse the sources of the decline of business cycle volatility in the UK using a dynamic factor model that allows for the presence of a structural break in the conditional mean and variance of output, sales, income and unemployment. We augment the factor model with an economic component to investigate the role of structural changes and improved monetary policy in the volatility decline of the series. Our results suggest that the dominant cause for the observed volatility decline is the reduced variability of shocks. [source] ENDOGENOUS BUSINESS CYCLES: THE INFLUENCE OF CHARACTER TRAITS,AUSTRALIAN ECONOMIC PAPERS, Issue 1 2009FUJIO TAKATA This article deals with how business cycles can occur, in light of character traits which influence individual behaviour in an economy. We assume an overlapping generations model in which every consumer has identical instantaneous utility which is additively separable with respect to time. The parameters of utility here include character traits which influence the choice between consumption and savings. In this situation, young individuals choose between current consumption and current savings which lead to future consumption in their old age. Individual character traits, which appear both in the shape of utility functions and in evaluations about utility in the future, affect these choices. And since these choices determine savings, individual character traits can eventually determine how our economy moves. Focusing on the relationship between individual character traits and savings formation, we demonstrate that endogenous business cycles with two periods can occur, in an economy comprised of individuals who opt for current consumption and who are careless in relation to future events, like Aesopian grasshoppers, and in other cases they do not. [source] TECHNOLOGY SHOCKS AND ROBUST SIGN RESTRICTIONS IN A EURO AREA SVAR,INTERNATIONAL ECONOMIC REVIEW, Issue 3 2009Gert Peersman We use a model-based identification strategy to estimate the impact of technology shocks on hours worked and employment in the euro area. The sign restrictions applied in the vector autoregression (VAR) analysis are consistent with a large class of dynamic stochastic general equilibrium (DSGE) models and are robust to parameter uncertainty. The results are in line with the conventional Real Business Cycle (RBC) interpretation that hours worked rise as a result of a positive technology shock. By comparing the sign restrictions method to the long-run restriction approach of Galí (Quaterly Journal of Economics,(1992) 709,38), we show that the results do not depend on the stochastic specification of the hours worked series or the data sample but only on the identification scheme. [source] It Takes Two to Tango: Lobbies and the Political Business CycleKYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 3 2010Daniel Horgos SUMMARY Merging the impacts of interest groups on economic growth with governments' interest in unemployment and inflation, there should be a link between political business cycles and interest group formation. Interpreting Olson's Law in a short-run perspective and integrating it with political business cycles, this contribution examines the link. We illustrate how such a model could look like, before investigating the relationship of lobbies, governments and voters empirically. As the time-series-analysis based on the German lobby-list shows, lobbies strategically organize their activity to foster reelection of the governments: It takes two to tango. [source] Art Museum Attendance, Public Funding, and the Business CycleAMERICAN JOURNAL OF ECONOMICS AND SOCIOLOGY, Issue 2 2009Sarah J. Skinner There are a number of important problems in contemporary museum finance, and this article identifies yet another possible difficulty. An aggregate statistical measure of museum attendance is calculated in this research and the attendance measure is shown to be countercyclical in nature. When set against federal and other allocations to museums, which are clearly pro-cyclical in nature, an attendance "disease" may be at least tentatively identified. Efficiency criteria, of course, require that costs are covered in real time. We find, however, that, despite the likelihood that museum attendance is income-elastic and a normal good, attendance varies countercyclically with the business cycle. We suggest that one possible explanation for this phenomenon is that a positive substitution effect on demand outweighs the income effect on demand for museum attendance over the cycle. From a policymaking perspective, these results call for a longer range planning horizon, that is, one that includes the full business cycle rather than just the financial year, as is the current U.S. government practice. [source] The New Keynesian Model and the Euro Area Business Cycle,OXFORD BULLETIN OF ECONOMICS & STATISTICS, Issue 2 2007Miguel Casares Abstract This paper describes a New Keynesian model incorporating transactions-facilitating money and a time-to-build constraint into endogenous capital accumulation. The calibrated New Keynesian model performs almost as well as the estimated vector autoregressive model in replicating Euro area cyclical correlations between key variables such as output and inflation, although it fares less well in predicting the procyclical dynamics of nominal interest rates. The presence of a time-to-build requirement in the model helps to improve its fit to Euro area data, whereas the role of transactions-facilitating money is much less important. Impulse,response functions and a decomposition of variance complete the analysis. [source] Profit Margins, Adjustment Costs and the Business Cycle: An Application to Spanish Manufacturing Firms*OXFORD BULLETIN OF ECONOMICS & STATISTICS, Issue 1 2003José C. Fariñas The objective of this paper is to investigate the cyclical behaviour of mark-ups, using a panel of Spanish manufacturing firms over the period 1990,1998. Margins are estimated from the optimal conditions derived from the firm's optimisation problem, which assumes that labour inputs are subject to adjustment costs. A number of results emerge from the estimations. First, we find positive and asymmetric adjustment costs for permanent labour inputs. Second, price-cost margins are markedly procyclical. Our estimates suggest that labour adjustment costs more than double the variability of average margins with respect to Lerner indexes. Third, we find differences in the parameters of the adjustment technology across industries which make markups of intermediate and production good industries more cyclical than consumer good industries. Finally, industry-specific price-cost margins are higher in more concentrated industries. [source] Budgeting during a Recession Phase of the Business Cycle: The Georgia ExperiencePUBLIC BUDGETING AND FINANCE, Issue 2 2003Thomas P. Lauth This article describes the impact of the nation-wide recession on Georgia revenue and spending decisions in the 2002 and 2003 fiscal years. The state's strong economy and conservative revenue estimating practices historically provided a hedge against revenue shortfalls during a recession phase of the business cycle. However, when state revenue collections for FY 2002 were 5 percent less than collections for the prior fiscal year, several gap-closing measures became necessary, including state agency spending reductions and substitution of bond proceeds for tax revenues. These revenue and expenditure gap-closing measures were intended to enable the governor to achieve his policy initiatives while maintaining a balanced budget. The state's Rainy Day Fund remained full and was held in reserve for budget balancing in FY 2004, if necessary. Budget balancing during the current recession has been made possible by the state's practice of not overcommitting to program increases and tax cuts during the expansion phase of the business cycle, and by effectively framing the issue of fiscal restraint. [source] Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian FrameworkTHE ECONOMIC RECORD, Issue 271 2009Mardi Dungey No abstract is available for this article. [source] Finance and the Business Cycle: International, Inter-Industry EvidenceTHE JOURNAL OF FINANCE, Issue 3 2005MATÍAS BRAUN ABSTRACT By considering yearly production growth rates for several manufacturing industries in more than 100 countries during (roughly) the last 40 years, we show that industries that are more dependent on external finance are hit harder during recessions. The observed difference in the behavior of industries is larger when financial frictions are thought to be more prevalent, linking the result directly to the financial mechanism hypothesis. In particular, more dependent industries are more strongly affected in recessions when they are located in countries with poor financial contractibility, and when their assets are softer or less protective of financiers. [source] Momentum, Business Cycle, and Time-varying Expected ReturnsTHE JOURNAL OF FINANCE, Issue 2 2002Tarun Chordia A growing number of researchers argue that time-series patterns in returns are due to investor irrationality and thus can be translated into abnormal profits. Continuation of short-term returns or momentum is one such pattern that has defied any rational explanation and is at odds with market efficiency. This paper shows that profits to momentum strategies can be explained by a set of lagged macroeconomic variables and payoffs to momentum strategies disappear once stock returns are adjusted for their predictability based on these macroeconomic variables. Our results provide a possible role for time-varying expected returns as an explanation for momentum payoffs. [source] Plant Exit, Vintage Capital and the Business CycleTHE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 2 2004Kjell G. Salvanes Despite the large literature on plant exit behavior, little attention has been paid to the vintage capital theory as an alternative hypothesis to learning. Learning models predict that exit rates decrease with plant age and the vintage capital theory predicts that exit rates increase with the age of capital. We use a panel of Norwegian manufacturing plants and construct an index of capital age to distinguish between the effects on exit rates. The empirical results imply that there is both a learning effect and a vintage capital effect. We also find that exit rates depend on the business cycle, and increase in severe downturns. [source] A Comparison of the Statistical Properties of Financial Variables in the USA, UK and Germany over the Business CycleTHE MANCHESTER SCHOOL, Issue 4 2000Elena Andreou This paper presents business cycle stylized facts for the US, UK and German economies. We examine whether financial variables (interest rates, stock market price indices, dividend yields and monetary aggregates) predict economic activity over the business cycle, and we investigate the nature of any non-linearities in these variables. Leading indicator properties are examined using cross-correlations for both the values of the variables and their volatilities. Our results imply that the most reliable leading indicator across the three countries is the interest rate term structure, although other variables also appear to be useful for specific countries. The volatilities of financial variables may also contain predictive information for production growth as well as production volatility. Non-linearities are uncovered for all financial series, especially in terms of autoregressive conditional heteroscedasticity effects. Strong evidence of mean non-linearity is also found for many financial series and this can be associated with business cycle asymmetries in the mean. This is the case for a number of American and British financial variables, especially interest rates, but the corresponding evidence for Germany is confined largely to the real long-term rate of interest. [source] A Disaggregated Markov-Switching Model of the Business Cycle in UK ManufacturingTHE MANCHESTER SCHOOL, Issue 4 2000Hans-Martin Krolzig Exploring index of production data for six major UK manufacturing sectors, we investigate the interaction of the UK business cycle with changes in the industrial structure of the UK economy during the last three decades. We propose a Markov-switching vector equilibrium correction model with three regimes representing recession, normal growth and high growth. The regime shifts simultaneously affect the common growth rate and the sectoral equilibrium allocation of industrial production. In contrast to previous investigations, a common cycle can be uncovered which is closely related to traditional datings of the UK business cycle. [source] Non-linearities, Business Cycles and Exchange RatesECONOMIC NOTES, Issue 3 2008Menzie D. Chinn This paper conjoins the disparate empirical literatures on exchange rate models and monetary policy models, with special reference to the importance of output, inflation gaps and exchange rate targets. It focuses in on the dollar/euro exchange rate, and the differential results arising from using alternative measures of the output gap for the US and for the Euro area. A comparison of ,in-sample' prediction against alternative models of exchange rates is also conducted. In addition to predictive power, I also assess the various models' plausibility as economic explanations for exchange rate movements, based on the conformity of coefficient estimates with priors. Taylor rule fundamentals appear to do as well, or better, than other models at the 1-year horizon. [source] Business Cycles under Monetary Union: A Comparison of the EU and USECONOMICA, Issue 267 2000Mark A. Wynne This paper documents business cycle similarities and differences among the12 Federal Reserve districts in the USA and the 15 countries that make upthe EU. The comparison is suggestive of what might be expected to emerge inthe way of business cycle synchronization from a monetary union between themember states of the EU. [source] Fiscal Policy, Business Cycles and Economic Stabilisation: Evidence from Industrialised and Developing Countries,FISCAL STUDIES, Issue 4 2007Young Lee This paper empirically investigates the responsiveness of fiscal policy to business cycles and the effectiveness of fiscal policy in reducing economic fluctuations. From regressions on the responsiveness of fiscal policy to business cycles, we find that the government's current expenditures and subsidies & transfers move counter-cyclically, whereas taxes and capital expenditures move pro-cyclically. Using economic fluctuations in neighbouring countries as an instrumental variable, we show that ordinary least squares (OLS) estimates understate the responsiveness of fiscal policy to economic fluctuations. We also find that fiscal policy responds asymmetrically over economic fluctuations. In investigating the effectiveness of fiscal policy in reducing economic fluctuations, we mitigate omitted variable bias by adding four important factors - military expenditures, oil production, economic fluctuations in neighbouring countries and fiscal policy responsiveness to business cycles. The results of effectiveness regressions are consistent with the responsiveness regressions, highlighting the importance of current expenditures, especially subsidies and transfers, in responding to business cycles and stabilising the economy. [source] Have Business Cycles Become More Synchronized?JCMS: JOURNAL OF COMMON MARKET STUDIES, Issue 1 2002Jakob De Haan Will further integration make business cycles in EMU countries more similar? This article answers the question by analysing to what extent business cycles in US and German states have become more synchronized and by examining whether synchronization in OECD countries is affected by trade intensity and exchange rate stability. Using long-run data for the US we find only mixed evidence for synchronization. However, post-war data for Germany suggest that business cycles behave more similarly over time. The evidence for OECD countries is mixed: trade intensity has led to more, and exchange rate stability to less, synchronization. [source] Measuring Synchronization and Convergence of Business Cycles for the Euro area, UK and US,OXFORD BULLETIN OF ECONOMICS & STATISTICS, Issue 1 2008Siem Jan Koopman Abstract This paper investigates business cycle relations among different economies in the Euro area. Cyclical dynamics are explicitly modelled as part of a time series model. We introduce mechanisms that allow for increasing or diminishing phase shifts and for time-varying association patterns in different cycles. Standard Kalman filter techniques are used to estimate the parameters simultaneously by maximum likelihood. The empirical illustrations are based on gross domestic product (GDP) series of seven European countries that are compared with the GDP series of the Euro area and that of the US. The original integrated time series are band-pass filtered. We find that there is an increasing resemblance between the business cycle fluctuations of the European countries analysed and those of the Euro area, although with varying patterns. [source] Business Cycles and the Role of Confidence: Evidence for Europe,OXFORD BULLETIN OF ECONOMICS & STATISTICS, Issue 2 2007Karl Taylor Abstract This paper examines whether indicators of consumer and business confidence can predict movements in GDP over the business cycle for four European economies. The empirical methodology used to investigate the properties of the data comprises cross-correlation statistics, implementing an approach developed by den Haan [Journal of Monetary Economics (2000), Vol. 46, pp. 3,30]. The predictive power of confidence indicators is also examined, investigating whether they can predict discrete events, namely economic downturns, and whether they can quantitatively forecast point estimates of economic activity. The results indicate that both consumer and business confidence indicators are procyclical and generally play a significant role in predicting downturns. [source] Some Preliminary Findings on Hong Kong Business CyclesPACIFIC ECONOMIC REVIEW, Issue 1 2001Chi Fai Leung This paper presents some preliminary quantitative findings on the characteristics of business cycles in Hong Kong. The recently developed "approximate bandpass filter" is used to extract the fluctuations at business cycle frequencies (8 to 32 quarters) of macroeconomic time series. Based on the filtered time series, the paper identifies the cyclical turning points, describes the pattern of output fluctuations, and examines the co-movement of various macroeconomic variables. [source] Partisan Waves: International Business Cycles and Electoral ChoiceAMERICAN JOURNAL OF POLITICAL SCIENCE, Issue 4 2009Mark Andreas Kayser Pundits have often claimed, but scholars have never found, that partisan swings in the vote abroad predict electoral fortunes at home. Employing semiannual Eurobarometer data on vote intention in eight European countries, this article provides statistical evidence of international comovement in partisan vote intention and its provenance in international business cycles. Electoral support for "luxury parties," those parties associated with higher spending and taxation, covaries across countries together with the business cycle. Both the domestic and international components of at least one economic aggregate,unemployment,prove a strong predictor of shifts in domestic vote intention. Globalization, by driving business cycle integration, is also synchronizing partisan cycles. [source] Political Business Cycles and Central Bank Independence*THE ECONOMIC JOURNAL, Issue 486 2003John Maloney This paper develops a dynamic model of Rational Partisan Business Cycles in which wage contracts overlap elections and wage setters have to make a prediction about the election result. Empirical analysis of 20 OECD countries supports the theoretical implication that left wing incumbents increase output, but increased expectation of a left wing regime reduces it. The model is extended to incorporate the effects of alternative measures of Central Bank Independence (CBI). The measure of objective independence outperforms the other measures and it is found that CBI reduces politically induced business cycles. [source] | |||||||||||||||||||||||||||||||