The Intranational Business Cycle: Evidence from Japan

51 Pages Posted: 9 Jun 2008

See all articles by Michael J. Artis

Michael J. Artis

University of Manchester - Institute for Political & Economic Governance (IPEG)

Toshihiro Okubo

University of Geneva - Graduate Institute of International Studies (HEI)

Date Written: Februray 2008

Abstract

Abstract: This paper studies the intranational business cycle - that is the set of regional (prefecture) business cycles - in Japan. One reason for choosing to examine the Japanese case is that long time series and relatively detailed data are available. A Hodrick-Prescott filter is applied to identify the cycles in annual data from 1955 to 1995 and bilateral cross-correlation coefficients are calculated for all the pairs of prefectures. Comparisons are made with similar sets of bilateral cross correlation coefficients calculated for the States of the US and for the member countries of a "synthetic Euro Area". The paper then turns to an econometric explanation of the cross-correlation coefficients (using Fisher's z-transform), in a panel data GMM estimation framework. An augmented gravity model provides the basic model for the investigation, whilst the richness of the data base also allows for additional models to be represented.

Keywords: Gravity Model, Heckscher Ohlin theorem, Hodrick-Prescott filter, Intranational business cycle, Market potential, Optimal Currency Area

JEL Classification: E32, F41, R11

Suggested Citation

Artis, Michael J. and Okubo, Toshihiro, The Intranational Business Cycle: Evidence from Japan (Februray 2008). CEPR Discussion Paper No. DP6686, Available at SSRN: https://ssrn.com/abstract=1141008

Michael J. Artis (Contact Author)

University of Manchester - Institute for Political & Economic Governance (IPEG) ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Toshihiro Okubo

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

PO Box 136
Geneva, CH-1211
Switzerland
+41 22 908 5900 (Phone)

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