Analysing Business Cycle Heterogeneity along the Firm-Level Dimension Evidence for the Austrian Economy

The analysis of business cycles, such as determining their characteristics, examining the driving forces or identifying their co-movement (differences), has a long tradition in the empirical literature. Most studies concentrate on the national (i.e., aggregated) level. Even though there exists common agreement in the literature that sub-national business cycles do not share exactly the same properties as the national counterpart, only a few comprehensive studies have been conducted investigating business cycles at a more disaggregated dimension (e.g., regional, sectoral or firm-level). However, a sound understanding of the various sources of cyclical fluctuations at a sub-national level would help policy-makers to improve their policy reaction to economic shocks and equip them with a better understanding of the economy as a whole. To date, no comprehensive empirical investigation utilising firm-level data has been conducted which focuses on regional business cycle differentials in the Austrian economy. This research aims to fill this gap and identifies specific factors incorporating spatial-specific effects that are responsible for the observed business cycle heterogeneity at the sub-national level.