The Intranational Business Cycle in Japan

Michael Artis and Toshihiro Okubo

No DP2010-19, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper studies the intranational business cycle - that is the set of regional (prefectural) business cycles - in Japan. One reason for choosing to examine the Japanese case is that long time series of relatively detailed data are available. A Hodrick-Prescott filter is applied to identify cycles in annual data from 1955 to 1995 and bilateral cross-correlations of prefectural GDPs are calculated for all pairs of prefectures, in our results we find fairly high cross-correlations. The paper then turns to an econometric explanation of the cross-correlation coefficients in the augmented gravity model framework. Two prefectures with similar GDPs and a shorter distance between them lead to business cycle synchronization whilst those with larger regional gaps in factor endowments (capital, labor and human capital) result in more idiosyncratic business cycle.

Keywords: Intranational business cycle; Hodrick-Prescott filter; Optimal Currency Area; Gravity Model; Heckscher-Ohlin theorem (search for similar items in EconPapers)
JEL-codes: E32 F41 R11 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-06
New Economics Papers: this item is included in nep-bec, nep-mac and nep-opm
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Citations: View citations in EconPapers (1)

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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2010-19.pdf First version, 2010 (application/pdf)

Related works:
Journal Article: The intranational business cycle in Japan (2011)
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