The UK Intranational Trade Cycle

48 Pages Posted: 18 Feb 2009

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: February 2009

Abstract

The paper uses annual data on real GDP for the UK regions and 12 manufacturing sectors to derive regional and regional/sectoral business cycles using an H-P filter. The cohesion of the cycles is examined via cross-correlations and comparisons made with the regional cycles for Japan, the United States and the EuroArea. The UK emerges as especially cohesive and efforts to explain the overall cross-correlations of regional GDP not very successful owing to the low variance of the explicand; when attention is turned to the sectoral/regional cycles, with their greater variance it is possible to demonstrate that economic variables such as distance, dissimilarity in structure and level of output play a significant role in explaining the variance in the cross-correlations. A significant feature of the cross-correlations in relation to those of EU countries is that whilst they continue to provide support for the "UK idiosyncrasy" they no longer do so as strongly as they did in earlier data samples.

Keywords: Euro-sympathy, Hodrick-Prescott filter, income convergence, intranational business cycle, regional business cycles

JEL Classification: E32, E41, R11

Suggested Citation

Artis, Michael J. and Okubo, Toshihiro, The UK Intranational Trade Cycle (February 2009). CEPR Discussion Paper No. DP7152, Available at SSRN: https://ssrn.com/abstract=1345678

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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