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Common trends and common cycles in Canada: who knew so much has been going on?

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  • Elizabeth C. Wakerly
  • Byron G. Scott
  • James M. Nason
Abstract
. It is generally accepted that convergence is well established for Canadian regional outputs. Another prevalent belief is that the Canadian regions respond symmetrically to the same aggregate shocks. A common trends / common cycles decomposition of Canadian regional outputs casts doubt on the convergence hypothesis and reveals trend shocks dominate fluctuations in Ontario, Quebec, and the Maritimes in the short and long run, but not in British Columbia and the Prairies. Thus, Canadian regional output fluctuations are driven by an asymmetric and economically important set of disaggregate propagation and growth mechanisms. Our results point to a new Canadian macroeconomic research agenda. JEL classification: C32, E32, O47 Tendances communes et cycles communs au Canada: qui savaient que tant de choses se sont passées? Il est généralement bien accepté que convergence il y a dans les niveaux de production régionaux au Canada. Une autre croyance est que les régions canadiennes répondent de manière symétrique aux mêmes chocs agrégés. Une décomposition des tendances communes et des cycles communs des productions régionales au Canada jette le doute sur l’hypothèse de convergence et montre que les chocs tendanciels dominent les fluctuations en Ontario, au Québec et dans les Maritimes à court et à long terme, mais pas en Colombie Britannique et dans le Prairies. Donc, les fluctuations du niveau régional de production au Canada sont enclenchées par un ensemble asymétrique et économiquement important de mécanismes désagrégés de propagation et de croissance. Ces résultats définissent un nouvel ordre du jour pour la recherche macro‐économique au Canada.

Suggested Citation

  • Elizabeth C. Wakerly & Byron G. Scott & James M. Nason, 2006. "Common trends and common cycles in Canada: who knew so much has been going on?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(1), pages 320-347, February.
    • Handle: RePEc:wly:canjec:v:39:y:2006:i:1:p:320-347
    DOI: 10.1111/j.0008-4085.2006.00349.x
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    Cited by:

    1. Jason Allen & Robert Amano & David P. Byrne & Allan W. Gregory, 2009. "Canadian city housing prices and urban market segmentation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1132-1149, August.
    2. Faruk Balli & Syed Basher & Rosmy Jean Louis, 2012. "Channels of risk-sharing among Canadian provinces: 1961–2006," Empirical Economics, Springer, vol. 43(2), pages 763-787, October.
    3. Nelson, Charles R., 2008. "The Beveridge-Nelson decomposition in retrospect and prospect," Journal of Econometrics, Elsevier, vol. 146(2), pages 202-206, October.
    4. Rosés, Joan R. & Minns, Chris, 2018. "Power to the Periphery? The failure of Regional Convergence in Canada, 1890-2006," CEPR Discussion Papers 12803, C.E.P.R. Discussion Papers.
    5. Basher, Syed A. & Fachin, Stefano, 2008. "The long-term decline of internal migration in Canada – Ontario as a case study," MPRA Paper 6685, University Library of Munich, Germany.
    6. Maxym Chaban & Graham M. Voss, 2016. "Is Canada an optimal currency area? An inflation targeting perspective," Canadian Journal of Economics, Canadian Economics Association, vol. 49(2), pages 738-771, May.
    7. Dalibor Stevanovic & Stéphane Surprenant & Rachidi Kotchoni, 2019. "Identification des points de retournement du cycle économique au Canada," CIRANO Project Reports 2019rp-05, CIRANO.

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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