Several studies have been made on regional business cycles from the
viewpoint of temporal dynamics. Hayashida and Hewings (2009) studied in
the case of Japanese power supply areas. They have shown the
possibility that the structural breaks in the dynamics of regional
business cycles exist in some areas. However, it remains unanswered
that: (1) Do structural breaks really exist in all regions? and (2)
When did these changes occur?
In this paper, we apply a Bayesian approach to identify a structural change at an unknown change point in a Markov-switching model of the regional business cycles in Japan. Empirical results suggest that the structural change in the regional business cycles is detected like the nation-wide business cycles. However, the phenomenon did not occur in all regions. It is identified only in Tohoku, Kanto and Chugoku regions.