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Wavelets in economics
The aim of this article is to highlight the usefulness of wavelet analysis in economics. Wavelet analysis is a very promising tool as it represents a refinement of Fourier analysis. In particular, it allows one to take into account both the time and frequency domains within a unified framework, that is, one can assess simultaneously how variables are related at different frequencies and how such relationship has evolved over time. Despite the potential value of wavelet analysis, it is still a relatively unexplored tool in the study of economic phenomena. The basic theoretical building blocks are reviewed and some empirical applications are provided.