Series: Working Papers. 1744.
Author: M.D. Gadea-Rivas, Ana Gómez-Loscos and Eduardo Bandrés
Regional analysis
- Quantitative methods
- Non-financial corporations, businesses
- Economic growth and convergence
Published in: Economics Letters (2018), vol. 162, pp. 171-176
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Abstract
The aim of this paper is to show the usefulness of Finite Mixture Markov Models (FMMMs) for regional analysis. FMMMs combine clustering techniques and Markov Switching models, providing a powerful methodological framework to jointly obtain business cycle datings and clusters of regions that share similar business cycle characteristics. An illustration with European regional data shows the sound performance of the proposed method.