Page - 2 - in The Austrian Business Cycle in the European Context

2 to be an indicator of aggregate economic activity like GDP2• A comovement of such fluctuations in other economic time series - whether interrelated or not -would also fulfil this criterion. Long - P/osser ( 1983) stressed the comovements of sectoral output fluctuations as being one of the important features of business cy- cles. Hornstein (2000) found, that these sectoral links show up in several time series like gross output. value added and materials and energy use. Rebelo (2005) supplied evidence for the strong correlation between hours employed by industry and total hours employed by the private sector. This strong comovement in eco- nomic time series like sectoral output3 probably induced Lucas ( 1977) to argue that business cycles were driven by aggregate shocks and not by sector-specific ones. Despite the widely accepted view of the existence of only one business cycle driven by aggregated shocks, these variations can show up in sectoral time series with different amplitudes and with some lagging or leading characteristics. Indeed, the prominent NBER approach for detecting business cycles is based on sorting the different time series by their leading and lagging properties. Beside the view that supports the existence of only one business cycle, studies based on band pass filters and spectral analysis methods reveal several cycles, all of which represent frequencies qualifying them for being business cycles. Apart from this, there are also statistical reasons for observing business cycle movements at the detailed sectoral level. It is quite easy to understand that if a 2 In fact, most studies on business cycles concentrate on GDP or industrial produc- tion as reference series. 3 The European System of National Accounts uses the term "sectors" only for subdi- viding the economy by the sectors "government", "private households", "enterprises" and the "external sector". Nevertheless, the English literature uses the term sector for different branches which is followed in the underlying study, too. In the terminology of the European System of National Accounts these are described as "kind of ac- tivities".