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The Annals of Regional Science

, Volume 60, Issue 1, pp 171–193 | Cite as

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

  • Carlo Ciccarelli
  • Anna Missiaia
Original Paper
  • 179 Downloads

Abstract

This 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.

JEL Classification

E32 N33 R11 F45 

Notes

Acknowledgements

This is a completely revised version of LSE Economic History Working Paper no. 186 (2014) and CEIS Working Paper no. 312 (2014). The underlying database and the methodologies have been considerably modified and updated compared to the previous versions. The paper has been presented at the LSE Economic History Graduate Students Seminar (2013), the Frontier Research in Economic and Social History (FRESH) meetings in Warsaw (2013) and Odense (2015), and at the European Historical Economics Society (EHES) conference in London (2013). We thank the participants for useful comments. Special thanks to Tomá Cvrček, Michael Pammer, Tommaso Proietti, Max Schulze, Tamás Vonyó, and Stephan Werner. We also thank the two anonymous referees and the editor for their feedback and constructive criticism. The usual disclaimer applies.

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Copyright information

© Springer-Verlag GmbH Germany 2017

Authors and Affiliations

  1. 1.Department of Economics and FinanceUniversity of Rome Tor VergataRomeItaly
  2. 2.Economic History DepartmentLund UniversityLundSweden

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