Page - 161 - in The Austrian Business Cycle in the European Context

161 10. Concluding remarks The location of business cycle turning points is still an important task for economic policy decisions. They mark the points for initiat- ing and terminating economic policy interventions targeted to smooth business cycle variations over time. Approximately every ten years, the Austrian Institute of Economic Research publishes results on turning points relating specifically to the Austrian business cycle. Whereas business cycle theory ad- vances only gradually over time, the methodical tool box for the extraction and evaluation of such cycles proceeds very fast. As national economies have become more and more integrated over time, the analysis of business cycles has to take such interrela- tions into account. Furthermore, the responsibility for monetary pol- icy in the euro area has been delegated by its member states to the ECB, which justifies an approach to business cycles in an inter- national context. In order to capture these interdependencies, the present study also includes Germany - Austria's largest trading partner - as well as the euro area as a whole. It makes an important difference whether turning point analysis is carried out in real time or in retrospect. Whereas the former is im- portant for economic policy decisions to be taken early enough to smooth the cycle, the latter is a precondition for developing a real time dating procedure. Furthermore, there is a trade-off between dating turning points at the recent time margin and the precision of their location in the past. This advises in favour of a separation of. both procedures and the present study concentrates entirely on establishing a dating calendar for the past. In order to achieve reliable results, several observations at the beginning and the end of the time series were sacrificed. To shed light on the transmission mechanism of business cycle variations, data disaggregated by sectors have been used for this study. According to Burns - Mitchell ( 1946), business cycle varia- tions show up in different sectors of the economy. This feature had