Optimal currency area and business cycle synchronization across U.S. states

Luís Aguiar-Conraria (), Pedro Brinca, Haukur Gudjonsson () and Joana Soares

MPRA Paper from University Library of Munich, Germany

Abstract: We use wavelet analysis to investigate to what extent individual U.S. states' business cycles are synchronized. The results show that the U.S. states are remarkably well synchronized compared to the previous findings w.r.t. the Euro Area. There is also a strong and significant correlation between business cycle dissimilitudes and the distance between each pair of states, consistent to gravity type mechanisms where distance affects trade. Trade, in turn, increases business cycle synchronization. Finally we show that a higher degree of industry specialization is associated with a higher dissimilitude of the state cycle with the aggregate economy.

Keywords: Optimum currency areas; business cycle synchronization; continuous wavelet transform; trade (search for similar items in EconPapers)
JEL-codes: E37 E52 R11 (search for similar items in EconPapers)
Date: 2015-02-13
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Optimum Currency Area and Business Cycle Synchronization Across U.S. States (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:62125

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