USA, Japan and the Euro Area: Comparing Business‐Cycle Features

Abstract

There has been much discussion of the differences in macroeconomic performance and prospects between the USA, Japan and the Euro area. Using Markov‐switching techniques, we identify and compare specifically their major business‐cycle features and examine the case for a common business cycle, asymmetries in the national cycles and, using a number of algorithms, date business‐cycle turning points. Despite a high degree of trade and financial linkages, the cyclical features of USA, Japan and the Euro area appear quite distinct. Documenting and comparing such international business‐cycle features can, for example, aid the development of business‐cycle models and inform policy making.