Does Austria respond to the German or the US business cycle?

✍ Scribed by Yin-Wong Cheung; Frank Westermann

• Publisher: John Wiley and Sons
• Year: 2000
• Tongue: English
• Weight: 171 KB
• Volume: 5
• Category: Article
• ISSN: 1076-9307
• DOI: 10.1002/(sici)1099-1158(200002)5:1<33::aid-ijfe115>3.0.co;2-h

✦ Synopsis

This study assesses the claim that the Austrian economy depends mainly on the German business cycle. Controlling for possible influences from the US economy, it is confirmed that the Austrian and German industrial production indexes have a common long-term stochastic trend and German industrial production Granger-causes the Austrian industrial production in the short run. However, German and US shocks only account for a small proportion of Austrian industrial production variability. Further, it is found that the three countries share a non-synchronized common business cycle.