Specialization and asymmetries in macroeconomic fluctuations: Evidence for the European regions

This paper examines the hypothesis that there is an inverse relationship between specialization in production and the symmetry of cyclical fluctuations in the regions of Europe. In so doing, an index of asymmetries for the cyclical fluctuations of per capita gross domestic product (GDP) in the regions of Europe is constructed and various geographical patterns are reported. From the sample, the Mediterranean regions show the highest levels of asymmetry. In addition, an econometric analysis of the determinants of the asymmetries in regional fluctuations is carried out. The results show the significance of specialization in production as a determinant of asymmetries in the regions and the importance of the geographical location of a region in accounting for its level of asymmetry. Furthermore, regions whose neighbours show highs levels of asymmetry tend to show similarly high levels of asymmetry.