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




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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.



Item Type: MPRA Paper -

Original Title: Optimal currency area and business cycle synchronization across U.S. states.-

Language: English-

Keywords: Optimum currency areas, business cycle synchronization, continuous wavelet transform, trade-

Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E37 - Forecasting and Simulation: Models and ApplicationsE - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary PolicyR - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes-





Author: Aguiar-Conraria, Luis

Source: https://mpra.ub.uni-muenchen.de/62125/



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