Page - 108 - in The Austrian Business Cycle in the European Context

108 lowing that recession peaked at the beginning of 1995. A mild re- cession, with its trough located in the second quarter of 1997, dampened Austrian economic activity again. Thereafter, a further business cycle set in which lasted for more than three years and peaked in the third quarter of 2000. It gave way to an extraordi- nary long stagnation of the Austrian economy. Over three years, activity was characterised by rather short cycles with frequencies above business cycle variations and a rather flat underlying trend. A trough in the third quarter of 2003 ended this sluggish perform- ance and the economy re-gained momentum. For the time be- ing, the dating procedure yields a further peak at the end of 2004, but this has to be taken with caution, as dates close to either end of the series are rather unreliable and this latest turning point is mir- rored neither in euro area GDP (excluding Germany and Austria) nor in German gross value added (excluding agriculture and for- estry). Over the time span between the first quarter of 197 6 and the sec- ond quarter of 2005, the Austrian economy completed all in all seven business cycles (defined as the business cycle variations found in BK-filtered Austrian gross value added), according to the Bry-Boschan dating procedure. Turning points detected in euro area GDP are plotted in the middle part of Figure A 1 d and their leading or lagging properties in relation to the Austrian cycle are shown in the respective row of Table A 2. As regards leading and lagging properties of the business cycles of the euro area and Germany, no clear picture emerges. Encouraging is, however, the small number of extra cycles for most of the observed series. This suggests that idiosyncratic cycles are of only minor importance, which is highly beneficial when setting up a dynamic factor model. Only for the sector providing financial and real estate, rent- ing and business services and the trade, restaurant, transport and