Title: The evolution of regional economic interlinkages in Europe
Authors: Ana Gomez-Loscos - Bank of Spain (Spain) [presenting]
Lola Gadea - University of Zaragoza (Spain)
Danilo Leiva-Leon - Banco de Espa\~na (Spain)
Abstract: Changes, across time and space, in the synchronization of European regional business cycles are analyzed, and the role that the sectoral composition has played in explaining such changes is investigated. Motivated by the lack of high frequency data at the regional level, we propose a new method to measure time-varying synchronization in small samples that combines regime-switching models and dynamic model averaging. Our main findings can be summarized as follows: (i) in only two years the Great Recession synchronized Europe twice more that what the European Union process did in decades, (ii) Ile de France is the region acting as main channel in the transmission of business cycles shocks in Europe, (iii) increases in regional sectoral composition similarity have a positive eect on business cycles synchronization, only for regions that already experience high levels of similarity in their productive structure, and in particular, after the Great Recession.