Some empirical examples of testing for synchronization

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Authors
Ilter, Niyazi
Advisor
Issue Date
1991
Keyword
Degree
Thesis (M.A.)
Department
Department of Economics
Other Identifiers
Abstract

The purpose of this paper is to give some empirical examples of testing for synchronization. The theoretical part of this paper is based on a study done by Dr. Tung Liu. In this study, Dr. Liu states that synchronization is related to the co-movement of two time series. If two economic series are closely related to each other both in shape and in timing, there is co-movement and they are synchronized. For example, the prime interest rate charged by major commercial banks should be synchronized. If one bank finds that there is a potential profit from raising the interest rate, the other banks will follow this strategy immediately. This example suggests that synchronization is related to market efficiency and free competition.This study tests for the synchronization of wage rates in three industries: Motor vehicles & Equipment (MOT), Electric & Electronic Equipment (EL) and Machinery (MAC). Similar tests are run for wages in four sectors: Manufacturing (MAN), Finance & Enterprises (GOV). Finally, a test for the synchronization of the Federal Funds Rate (FFR) and Discount Rate (DR) is conducted.

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