Page - 31 - in The Austrian Business Cycle in the European Context

31 with again f!l and m being the lower and upper boundaries and K representing the length of the filter. Figure 2: Gain function of stationary transformations 2 1.5 ' I I I , .. ' __ .:a.a.....---.;:;,-::;._, ' Hodrlck-Prescotl 0.5 0.6 1.6 2 u SealonaladJUllmenl: -TRAMO·SEATS •··•Xl2 Source: Fiorentini - Planas (2003). ' \ I ' \ \ I \I II " ,, " ' The upper and lower boundaries (usually cyclical components be- tween 8 and 32 quarters)54 are captured, by filtering out all fre- quencies above or below. Convenient properties of this BK filter are that the identification assumption requires no restriction con- cerning the trend to be either deterministic or stochastic and it al- 54 In the frequency domain, this corresponds to a band between ,r;/16 (= 32 quar- ters) and ,r;/4 (= 8 quarters).