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The fall and rise of business cycle co-movements in Imperial Austria's regions

Missiaia, Anna LU and Ciccarelli, Carlo (2017) In Annals of Regional Science
Abstract
his paper investigates regional business cycle co-movements in Austria–Hungary from 1867 to 1913. Economic theory suggests that rising market integration induces sectoral specialisation, resulting in a reduction in the correlation of regional GDP cycles (Krugman effect). However, the synchronisation of business cycles is expected to increase because of the growing inter-linkages among regions led by the adoption of common currency and common economic policies (Frankel and Rose effect). We show that in the case of nineteenth-century Austria–Hungary the specialisation effect, most likely amplified by the stock market crisis of 1873, prevailed during 1867–1890, while the common currency/policy effect prevailed during 1890–1913, when the gold... (More)
his paper investigates regional business cycle co-movements in Austria–Hungary from 1867 to 1913. Economic theory suggests that rising market integration induces sectoral specialisation, resulting in a reduction in the correlation of regional GDP cycles (Krugman effect). However, the synchronisation of business cycles is expected to increase because of the growing inter-linkages among regions led by the adoption of common currency and common economic policies (Frankel and Rose effect). We show that in the case of nineteenth-century Austria–Hungary the specialisation effect, most likely amplified by the stock market crisis of 1873, prevailed during 1867–1890, while the common currency/policy effect prevailed during 1890–1913, when the gold standard was adopted in both Austria and Hungary. However, core and peripheral regions contributed differently to the correlation of business fluctuations. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
epub
subject
in
Annals of Regional Science
publisher
Springer
external identifiers
  • scopus:85030529985
ISSN
1432-0592
DOI
10.1007/s00168-017-0850-5
language
English
LU publication?
yes
id
1d58512d-9c9e-491f-a12c-5cb1774e73fd
date added to LUP
2017-09-26 12:00:21
date last changed
2018-01-07 12:19:20
@article{1d58512d-9c9e-491f-a12c-5cb1774e73fd,
  abstract     = {his paper investigates regional business cycle co-movements in Austria–Hungary from 1867 to 1913. Economic theory suggests that rising market integration induces sectoral specialisation, resulting in a reduction in the correlation of regional GDP cycles (Krugman effect). However, the synchronisation of business cycles is expected to increase because of the growing inter-linkages among regions led by the adoption of common currency and common economic policies (Frankel and Rose effect). We show that in the case of nineteenth-century Austria–Hungary the specialisation effect, most likely amplified by the stock market crisis of 1873, prevailed during 1867–1890, while the common currency/policy effect prevailed during 1890–1913, when the gold standard was adopted in both Austria and Hungary. However, core and peripheral regions contributed differently to the correlation of business fluctuations.},
  author       = {Missiaia, Anna and Ciccarelli, Carlo},
  issn         = {1432-0592},
  language     = {eng},
  month        = {09},
  publisher    = {Springer},
  series       = {Annals of Regional Science},
  title        = {The fall and rise of business cycle co-movements in Imperial Austria's regions},
  url          = {http://dx.doi.org/10.1007/s00168-017-0850-5},
  year         = {2017},
}