Page - 162 - in The Austrian Business Cycle in the European Context

162 been brought to bear in our study, by defining the international business cycle according to a multivariate approach using infor- mation by sectors. The present study starts with an overview on the specific steps to be taken for dating the business cycle. It discusses various theo- retical concepts establishing the base for different approaches for extracting cyclical variations. Filter techniques in the time as well as in the frequency domain are presented beside model-based approaches with or without assuming a specific structure. Their theoretical properties, shortcomings and implications, as docu- mented by various empirical and theoretical studies, are exam- ined. Based on this information, it was decided to concentrate on three filtering methods in order to clean for a trend or to extract directly periodic variations of business cycle nature: the first-order-differ- ence filter, the Hodrick-Prescott filter and the Baxter-King band- pass filter. In a next step, several approaches to determine the business cy- cle were presented. On the basis of these considerations, the uni- variate, popular and rather good comparable method of ad-hoc declaration of special cycles included in gross value added with- out agriculture and forestry as well as a multivariate interpretation derived by a dynamic factor model has been chosen for the pre- sent study. For dating the outcome, only the Bry-Boschan routine was used. Thus, a comparison of three filtering methods alterna- tively combined with the ad-hoc method of selection of the busi- ness cycle and a multivariate determination has been retained. All of these respective outputs have been dated by the Bry-Boschan routine, so that we obtained six dating calendars for the Austrian business cycle, including as well all other series considered. The least reliable results are those based on data transformed by first-order differences. This method cleans only for stochastic trends of order one, which is a rather specific kind of trend. Furthermore,