Direct Evidence for Synchronization in Japanese Business Cycles

We have analyzed the Indices of Industrial Production (Seasonal Adjustment Monthly Index) for a long period of 240 months (January 1988 to December 2007) in order to develop a deeper understanding of economic shocks. Angular frequencies estimated using the Hilbert transform are almost identical for the 16 industrial sectors in the indices. Moreover, partial phase locking was observed for the sectors. These are direct evidence of the synchronization present in Japanese business cycles. We also showed that the phase time series carries information on economic shocks. Common shock and individual shocks are separated using phase time series. The former dominates the economic shock in all of 1992, 1998 and 2001. The obtained results suggest that the business cycle may be described as dynamics of coupled limit cycle oscillators exposed to random individual shocks.