Title
The Intranational Business Cycle in Japan
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.
Michael ARTIS
Swansea University, and CEPR
Toshihiro OKUBO
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: (81) 78 803 7036
Fax: (81) 78 803 7059