- a first cycle from the peak in the first quarter
of 1992 to the peak in the first quarter of
1995;
- a cycle in the mid-1990s from the peak in the
first quarter of 1995 to the peak in the first
quarter of 1998;
- a third cycle in the late 1990s from the peak
in the first quarter of 1998 to the peak in the
third quarter of 2000.
The business cycle in industry followed this
pattern closely, albeit with a more pronounced
amplitude (see Chart 8, right panel).
While industry seems to be an important factor
in shaping the aggregate business cycle, other
sectors may contribute as well, both directly
through their particular sectoral volatility or
indirectly through sectoral linkages.
Decomposing the EU-wide variance of gross
value added growth41 by sector can hence be
used to assess the relative importance of
sectoral volatility compared with sectoral
linkages. Whereas variances are used to
measure sectoral volatility, covariances
measure the cross-sectoral impact of volatility.
Table 6 presents the decomposition of the
overall variance of the growth rate of value
added using the following sectoral breakdown
of quarterly gross value added figures43
(available from Eurostat) which will be used
throughout the remainder of this section:
41 See Annex 4.2.2.2 for a discussion of the sectoral decomposition
of aggregate volatility.
42 See Annex 4.1.2 for the availability of quarterly and monthly
data that have been used for this chapter.
|
Table 6 The EU business cycle and its sectoral components | |||||
|
(Percentages of euro area-wide variance of quarterly gross value added explained by sectoral volatility (variance-covariance Variances | |||||
|
1988-2002 |
1993-1997 |
1998-2002 | |||
|
Industry |
11.1 |
Industry |
11.5 |
Industry |
12.6 |
|
Trade |
8.3 |
Trade |
8.7 |
Trade |
7.0 |
|
Construction |
4.7 |
Construction |
5.8 |
Business activities |
5.2 |
|
Business activities |
4.5 |
Business activities |
4.5 |
Construction |
3.2 |
|
Public services |
2.4 |
Public services |
2.6 |
Public services |
2.3 |
|
Agriculture |
1.9 |
Agriculture |
1.6 |
Finance |
1.8 |
|
Finance |
1.5 |
Finance |
1.1 |
Agriculture |
1.6 |
|
Total |
34.4 |
Total |
35.9 |
Total |
33.6 |
|
Covariances | |||||
|
1988-2002 |
1993-1997 |
1998-2002 | |||
|
Industry - Trade |
6.6 |
Industry - Trade |
6.8 |
Industry - Trade |
7.0 |
|
Construction - Trade |
4.0 |
Construction - Trade |
5.1 |
Industry - Bus. act. |
4.5 |
|
Industry - Construction |
3.9 |
Industry - Construction |
4.4 |
Industry - Construction |
3.9 |
|
Industry - Bus. act. |
3.9 |
Trade - Bus. act. |
3.6 |
Trade - Bus. act. |
3.5 |
|
Agriculture - Industry |
3.6 |
Construction - Bus. act. |
3.5 |
Industry - Pub. serv. |
3.5 |
|
Trade - Bus. act. |
3.5 |
Industry - Bus. act. |
3.4 |
Agriculture - Industry |
3.4 |
|
Trade - Pub.serv. |
3.0 |
Trade - Pub. serv. |
3.3 |
Construction - Trade |
3.1 |
|
Construction - Bus. act. |
2.9 |
Agriculture - Industry |
3.1 |
Trade - Pub. serv. |
3.1 |
|
Agriculture - Trade |
2.8 |
Agriculture - Trade |
2.8 |
Finance - Bus. act. |
3.0 |
|
Industry - Pub. serv. |
2.6 |
Industry - Pub. serv. |
2.4 |
Bus. serv. - Pub. serv. |
2.4 |
|
Trade - Finance |
2.3 |
Trade - Finance |
2.2 |
Construction - Bus. act. |
2.2 |
|
Finance - Bus. act. |
2.2 |
Construction - Pub. serv. |
2.0 |
Industry - Finance |
2.2 |
|
Industry - Finance |
2.1 |
Finance - Bus. act. |
2.0 |
Agriculture - Trade |
2.1 |
|
Agriculture - Bus. act. |
1.9 |
Industry - Finance |
1.8 |
Trade - Finance |
1.9 |
|
Bus. act. - Pub. serv. |
1.8 |
Agriculture - Bus. act. |
1.7 |
Agriculture - Construction |
1.6 |
|
Agriculture - Construction |
1.8 |
Bus. act. - Pub. serv. |
1.6 | ||
|
Total |
48.9 |
Total |
49.7 |
Total |
47.5 |
|
Sources: Eurostat, NCBs, ECB calculations | |||||
|
Countries: Belgium, Germany, Denmark, Spain, France, Italy, Netherlands, Austria, Finland. | |||||
36
ECB
Occasional Paper No. 19
July 2004