Bevan, cnemeconomics, london business school, sussex place. Determinants of business cycle synchronisation across. Through the twentieth century in the united states and other highincome countries, growth in real incomes was accompanied by a. Public economics we explore the dynamics of real house prices by estimating serial correlation and mean reversion coefficients from a panel data set of 62 metro areas from 19791995. Pdf on the determinants of uk house prices semantic scholar. A business cycle can be defined as an economic sequence that is characterized by recession, recovery, growth and decline. The determinants of mortality david cutler, angus deaton and adriana llerasmuney t he pleasures of life are worth nothing if one is not alive to experience them. The determinants of uk business cycles the determinants of uk business cycles holland, allison. The summary statistics of the economy are explored, including the spectral density.
Our investigation suggests that some methodological frameworks are available in the literature, but none is perfect. Firstly, we turn to optimum currency area theory, to see what conditions need to be meet, if. Evidence from european firms marcio genovevo da costa1 june 2016 abstract the literature on corporate financing is quite extensive. Another potential determinant of economic resilience to shocks is the strength of. Holland and scott 1998, the determinants of uk business cycles, economic journal, 108, 106792 king and plosser 1993, low frequency. The literature on the determinants of business cycle synchronization has increased in recent years. This paper is an attempt to empirically investigate the determinants of business cycle synchronization in east asia. The purpose of this paper is to study the former using uk data we attempt to outline the main sources of uk postwar business cycles. Mfis are able to maintain a consistent lending environment over the business cycle by looking at loan performance and delinquency rates. Financial sector and business cycles determinants in the emu context. There is not always a chronological, linear progression among the phases of the business cycle, and there have been cycles when the economy has skipped a phase or retraced an. Many free enterprise capitalist countries such as usa and great britain have registered rapid economic growth during the last two centuries.
The diagram above is a hypothetical illustration of the business cycle. Banktype specific determinants of sensitivity of loanloss provisions to business cycle article in european journal of finance 2417. Other variables include industry size, ownership, and. The determinants of uk business cycles, the economic. Dec 27, 2001 this paper considers the causes of post. There is evidence that the duration and amplitude of housing cycles vary widely. Using an extended stochastic growth model we construct estimates of productivity and preference shocks both of which are highly persistent, volatile. To date, the literature has examined a variety of macroeconomic and microeconomic factors that influence firm financing. Determinants of business cycle synchronization in east asia. It is measured by the ratio of equity capital to total assets. Postwar british economic growth and the legacy of keynes. On the determinants of uk house prices lu xu1 bo tang2 hous e.
Management school, university of sheffield, sheffield, united kingdom. Understanding changes in international business cycle dynamics james h. Our dataset includes over 100 countries, both developed and developing. Determinants of business cycles in small scale macroeconomic.
The business cycle approach to equity sector investing. There is widespread agreement that a business cycle lasts between 8 and 32 quarters and the length of the moving average is 12 quarters baxter and king,1999. Business cycles are irregular in both length and severity. Kattumanw wuniversity of st andrews, scotland zlondon business school university of cambridge final version received 27 february 2007. Also, despite large increases in trade and openness, g7 business cycles have not become more synchronized. Understanding changes in international business cycle. We argue, therefore, that analysis of capital structure is incomplete without a detailed examination of all forms of corporate debt. The worst event occurred in the 1870s when the railroad boom of the 1860s was followed by a disastrous decade of defaults. Shifting between these phases is typically referred to as the business cycle. Meaning, phases, features and theories of business cycle. Determinants of uk business cycles the economic journal. A variety of granger causality tests establish whether these productivity and preference terms are unpredictable and so can be potentially considered as the cause.
The determinants of uk business cycles using an extended stochastic growth model we construct estimates of productivity and preference shocks both of which are highly persistent, volatile and potentially capable of explaining uk business cycles. The determinants of uk business cycles bank of england. Holland a, scott a 1998 the determinants of uk business cycles. University of groningen perspectives on productivity and. Determinants of real house price dynamics dennis r. Determinants of comovement and of lead and lag behavior of. If that were the case, distance could have potentially a positive effect on asset trade because of the diversification motive1. Consequently, these are the values 2 to 8 years that we use in our detrending methods. Before 2009, most of the studies in the literature stream used the correlation of gdp. Economic fluctuations and growth program, international finance and macroeconomics program this paper investigates the determinants of business cycle comovement between countries. Pdf patterns and determinants of business cycle synchronization. Using an extended stochastic growth model we construct estimates of productivity and preference shocks both of which are highly persistent, volatile and potentially capable of explaining uk business cycles. Decomposition of labour productivity for us and uk manufacturing industries. Determinants of comovement and of lead and lag behavior of business cycles in the eurozone, working papers series 2 1502, iscteiul, business research unit bruiul.
Determinants of uk business cycles london business school. Their findings suggest that such correlation exists, although the variables used were not direct measures of the business cycle. The most frequently used are inflation, business cycles, and interest rates. The business cycle approach to equity sector investing for investors. This paper addresses some fundamental economic questions regarding the determinants of business cycles in the emu. To address this question, the study conceptually and. Gomis and sameer khatiwada2 26 aug, 2015 abstract this paper analyses the impact of recessions and booms on firm performance. A most important determinant of dividend policy of a company is its nature of business. Our results suggest that while at the aggregate level, macroeconomic conditions explain.
Determinants of failures and acquisitions of uk firms by a. Banks capital is widely used as one of the determinants of bank profitability since it indicates the financial strength of the bank athanasoglou, brissimis and delis, 2005. Multiple determinants of business cycle synchronization by. This paper considers the causes of postwar uk business cycles. The determinants of uk business cycles allison holland and andrew scott bank of england, threadneedle street, london, ec2r 8ah. Pdf determinants of business cycle synchronisation across. However, if these shocks are to be considered as the underlying cause of business cycle fluctuations they must be exogenous to other macroeconomic variables. The remainder of the essay will consider the prospects of. Economic indicators and the business cycle the term business cycle implies that expansions and contractions occur at regular, predictable intervals.
An evidence from pakistan usama ehsan khan and syed monis jawed the explanation of the potential sources of economic fluctuations is a key research domain in macroeconomics. The determinants of uk business cycles, bank of england working papers 58, bank of england. We catalogue the incidence and typical duration of uk business cycles. He is also grateful to economists at the uk department of business innovation. However, researchers have so far not shed light on the ipo determining factors in europe as a whole. Numerous and frequentlyupdated resource results are available from this search. The determinants of crossborder equity flows richard portesa,b,c,d,1,he. Part 3 compares the recent business cycles and growth cycles for several major industrialized, marketoriented countries. This is due to the seminal works of burns and mitchell 1946. Business cycle determinants of us foreign direct investments. Dating and estimation of the model show that longterm trade factor. This cycle is a promi nent feature in economiesboth advanced and developingand can be corre lated across countries. We estimate competing risk hazard regression models using data on uk quoted firms spanning a 38.
The determinants of uk business cycles allison holland and andrew scott this paper considers the causes of postwar uk business cycles. The role of external factors find, read and cite all the research you. The determinants of uk business cycles, the economic journal. The aim of this study is to define and identify the determinants of business cycles. Capital structure and its determinants in the uk address for correspondence. This paper addresses some fundamental economic questions regarding the determinants of business cycles in the emu in the time period 1995 2012. A trend towards more moderate business cycle fluctuations is often quoted as a stylised. This allows us to create a chronology of financial cycles following the tradition of burns and mitchell 1946 who provided the fundamental approach for the study of u. We study the information content of the university of michigans index of consumer sentiment as well as its five components. Key determinants of business cycles on growth issues.
Department of economics, university of sheffield, sheffield, united kingdom. An empirical study of south african banks i declare that the above dissertation is my own work and that all the sources that i have used or quoted have been indicated and acknowledged by means of complete references. Jul 12, 2006 we identify measures of shocks to total factor productivity and preferences from two real business cycle models and subject them to granger causality tests to see whether they can be considered exogenous to other plausible sources of the german business cycle. Analysis of the determinants of house price changes gov. But economic growth in these countries has not followed steady and smooth upward trend. Patterns and determinants of business cycle synchronization in the enlarged european. This paper provides an overview of the methodology and its future course. Pdf determinants of business cycles in emerging market. We study the impact of the macroeconomic environment on business exit in a world where acquisition and bankruptcy are co. Abstract this paper examines uk business cycle fluctuations in. This paper investigates the determinants of business cycle comovement between countries. Business cycle framework the worlds largest economies are all in expansion, though at various phases of the business cycle note. By contrast, most englishspeaking countries including the uk.
Most of the research studies use a common set of macroeconomic determinants. Financial sector and business cycles determinants in the emu. Using household data from the surveys of consumers over 197920, we identify the main determinants of these indicators and document their varying role over the business cycle. Banktype specific determinants of sensitivity of loan. London business school, sussex place, regents park, london, nw1 and all souls. Alfredmaussnerandjuliusspatz determinants of business cycles in small scale macroeconomic models. Specifically, the goal of this paper is to examine whether mfi loan performance displays the same procyclical fluctuations as commercial banks over the business cycle. Watson harvard university princeton university abstract the volatility of economic activity in most g7 economies has moderated over the past 40 years. This helps us to provide you with a good user experience and also allows us to improve our website. The difficulty is that there are many potential candidate explanations.
Multiple determinants of business cycle synchronization october 1, 2012. Home the determinants of uk business cycles the determinants of uk business cycles working papers set out research in progress by our staff, with the aim of encouraging comments and debate. Pdf this article summarizes the main findings on problems related to the measurement and identification of business cycles. Economic fluctuations and growth program, international finance and macroeconomics program. Withinfirm versus external determinants of productivity. The determinants of uk business cycles holland 1998 the. This website uses cookies to distinguish you from other users. Pdf on oct 24, 20, fatma pinar erdem and others published determinants of business cycles in emerging market economies. The determinants of mortality princeton university.
The correlation of business cycles implies that groups of countries are. This is not comparable to the stylised estimates of the impact of individual determinants on real house prices, holding all else held equal. Evidence from spanish firms abstract access to external finance is a key determinant of a firm s ability to develop, opera te and expand. Pdf in this paper we focus on cycles and trends of some macroeconomic and housing market variables representative of the french economy. Consumer good industry normally suffers less from uncertainties of earnings and therefore. It is a wellestablished fact that the nature of business has far reaching impact on the volume and stability of earnings.
Terrones1 april 2011 abstract this paper analyzes the interactions between business and financial cycles using an extensive database of over 200 business and 700 financial cycles in 44 countries for the period 1960. Asset pricing, economic fluctuations and growth, monetary economics business cycles are costlier and stabilization policies more beneficial than widely thought. The aim of business cycle theory is to identify the causes of business cycles and outline the various propagation mechanisms through which these produce cyclical fluctuations. Demirguckunt and huizinga 2000 and bikker and hu 2002 attempted to identify possible cyclical movements in bank profitability the extent to which bank profits are correlated with the business cycle. Oclcs webjunction has pulled together information and resources to assist library staff as they consider how to handle coronavirus. This paper investigates the determinants of business cycle comovement between. Frankel and rose 1998 present empirical evidence that higher bilateral trade between two countries is associated with morecorrelated business cycles. We identify measures of shocks to total factor productivity and preferences from two real business cycle models and subject them to granger causality tests to see whether they can be considered exogenous to other plausible sources of the german business cycle. Determinants of consumer sentiment over business cycles.
The purpose of the study is to identify the potential factors that. Reliable information about the coronavirus covid19 is available from the world health organization current situation, international travel. Productivity and the economic cycle welcome to gov. What are the determinants of business model performance in the software industry. Better understanding the effects of recessions 1 roger m. The following factors have probably contributed significantly to. Sumit agarwal, souphala chomsisengphet and chunlin liu abstract in this paper, we empirically validate the importance of owner and business credit risk characteristics in determining default behaviour of more than 31 000 small business loans by type and size.
We look at 70,000 firms in over 100 countries between 1986 and 2014 and document the trends in firm entry over the business cycle. The determinants of uk business cycles, cepr discussion papers 1409, c. Styliani christodoulopoulou department of economics university of essex june 2007 abstract this paper examines empirically which factors determine output correlations in a sample of 76 economies over the period 19731997. Empirical evidence suggests that tfp growth accounts for a fairly large proportion of the growth among western industrialised countries, including the united kingdom and the united states. Since theory is indeterminate upon which factors are behind synchronization, identifying the determinants of synchronization is thus an empirical matter. The determinants of uk business cycles holland 1998. Pdf business cycle determinants of us foreign direct. The determinants of uk business cycles wiley online library. This paper identifies factors of industrial cycles synchronization between tunisia and its european partners through the adl models on monthly data 1. Introduction the frequency and extent of business cycles fluctuations entail significant implications for the real economic activity and the wellbeing of society. Does ipo activity fluctuate in accordance with the business cycle. In a monetary union, fiscal policy is probably the most important tool in dealing with countryspecific fluctuations.
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