Regional Dimensions of the Australian Business Cycle

D<sc>ixon</sc> R. and S<sc>hepherd</sc> D. Regional dimensions of the Australian business cycle, <italic>Regional Studies</italic>. This paper deals with the identification of, and explanations for, co-movement in regional business cycles using employment data for Australian states and territories (regions). It shows that both raw growth rates and the deviations from a Hodrick--Prescott trend reflect noise in the series as well as any cycle, but that both can be manipulated so as to reveal their cyclical components. It is found that growth rate models are dominated by noise, whereas the Hodrick--Prescott filter allows identification of the cyclical features of interest. The extent of co-movements in cyclical fluctuations in employment amongst the regions can be explained by regional industry structure and size of region.