Measuring business cycles is critical in determining the stylised facts of the business cycle involving aggregate macroeconomic behaviour over time. In the Pacific Island region, there are currently no empirical studies undertaken on business cycles for the Pacific Island countries (PICs). Hence, there iscurrently no specific evidence of business cycle stylised facts for PICs. This analysis makes an attempt to fill this void by measuring business cycles for six PICs namely Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu. In addition, the degree of the business cyclesfor these PICs is assessed forsimilarities among the cycles.Techniques such as theBeveridge-Nelson decomposition (state-space framework), Baxter-King band-pass filter, and the econometric test by Vahid and Engle (1993)are applied. The analysis employs thenovel quarterly GDP data by Lahari et al. (2008, 2010).Apart from deriving the business cycles, the findings showvarying cycles as a group (PICs) but some similarity in cycles are observed for the sub-group of Melanesian countries. A test of common cycles also showstwo commonsynchronised cycles among PICs, whilst also noting major differences.
Keywords: Measuring Business Cycles; Pacific Island Countries
Biography: Willie Lahari is an selected member of the ISI and currently the Deputy National Statistician (Statistical Servies) Of Papua New Guinea Statistics Office. He is also an Regional Economist. He has severed as a Economic Statisticis Advisor in the South Pacific Region in various capacities. He has over 20 years working expereince in statistics both at the national and regional level. His interests are in economic time series statistical analysis.