| Several studies have been made on regional business cycles from the viewpoint of temporal dynamics. Hayashida and Hewings (2008) examined the business cycle phases in Japanese power supply areas by applying a regime switching model. They have shown that regional business cycles precisely differ in the timing of turning points, although they roughly co-move with nation-wide or other regional cycles. This implies that spatial interdependencies as well as region-temporal effects play an important role in the change of regional business cycles. However, only little attention has been explicitly given to the interdependencies of regional business cycles in the previous studies. In this paper, we apply a spatial vector auto-regressive (SpVAR) model to three economic variables in nine power supply areas of Japan. A SpVAR model suggested by Beenstock and Felsenstein (2006) among the others enables us to examine spatial as well as temporal dynamics among regional economic variables by introducing geographical distances explicitly into the VAR model. Regarding a result, it is found that all three regional economic variables such as employment situation, industrial production and consumption, which are the key components of the business cycles, co-move dependently with each other. |