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The economic performance of cities: A Markov-switching approach

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  • Owyang, Michael T.
  • Piger, Jeremy M.
  • Wall, Howard J.
  • Wheeler, Christopher H.

Abstract

This paper examines the determinants of employment growth in metro areas. To obtain growth rates, we use a Markov-switching model that separates a city's growth path into two distinct phases (high and low), each with its own growth rate. The simple average growth rate over some period is, therefore, the weighted average of the high-phase and low-phase growth rates, with the weight being the frequency of the two phases. We estimate the effects of a variety of factors separately for the high-phase and low-phase growth rates. Growth in the high phase is related to both human capital and industry mix, while growth in the low phase is related to industry mix only, specifically, the relative importance of manufacturing. Overall, our results strongly reject the notion that city-level characteristics influence employment growth equally across the phases of the business cycle.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 64 (2008)
Issue (Month): 3 (November)
Pages: 538-550

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Handle: RePEc:eee:juecon:v:64:y:2008:i:3:p:538-550

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Growth in cities Business cycle phases;

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References

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Citations

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Cited by:
  1. James D. Hamilton & Michael T. Owyang, 2011. "The Propagation of Regional Recessions," NBER Working Papers 16657, National Bureau of Economic Research, Inc.
  2. Ghent, Andra C. & Owyang, Michael T., 2010. "Is housing the business cycle? Evidence from US cities," Journal of Urban Economics, Elsevier, Elsevier, vol. 67(3), pages 336-351, May.
  3. Wall, Howard J., 2011. "The Employment Cycles of Neighboring Cities," MPRA Paper 29410, University Library of Munich, Germany.
  4. Francis Neville & Owyang Michael T. & Sekhposyan Tatevik, 2012. "The Local Effects of Monetary Policy," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 12(2), pages 1-38, March.
  5. Leora Friedberg & Michael Owyang & Anthony Webb, 2008. "Identifying Local Differences in Retirement Patterns," Working Papers, Center for Retirement Research at Boston College, Center for Retirement Research wp2008-18, Center for Retirement Research, revised Dec 2008.
  6. Rubén Hernández-Murillo & Michael T Owyang & Margarita Rubio, 2013. "Clustered Housing Cycles," Discussion Papers, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM) 2013/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  7. Kristie M. Engemann & Rubén Hernández-Murillo & Michael T. Owyang, 2008. "Regional aggregation in forecasting: an application to the Federal Reserve's Eighth District," Regional Economic Development, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue Oct, pages 15-29.
  8. Michael T. Owyang & Jeremy M. Piger & Howard J. Wall, 2010. "Discordant city employment cycles," Working Papers, Federal Reserve Bank of St. Louis 2010-019, Federal Reserve Bank of St. Louis.

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