Bank of Finland Research Discussion Papers No. 23/2019
Understanding the relationship between national income GDP components is an essential part of macroeconomics. This study investigates quarterly real GDP component data for the U.S. and the U.K. and applies continuous wavelet analysis on cross comparisons of the data, from both within and between the two datasets. The results show that the cyclical interactions between consumption and investment are the most complex and most substantial at several different frequencies. The relationship of exports with other macroeconomic variables has also developed over time, likely due to the evolution of an international business cycle.