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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

Related research

Keywords: Growth in cities Business cycle phases;

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References

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  1. Edward L. Glaeser, Jed Kolko, and Albert Saiz, 2001. "Consumer city," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 27-50, January.
  2. Edward L. Glaeser, 2005. "Urban colossus: why is New York America's largest city?," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 7-24.
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  4. Owyang, Michael T. & Piger, Jeremy & Wall, Howard J., 2008. "A state-level analysis of the Great Moderation," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 578-589, November.
  5. Stuart S. Rosenthal & William C. Strange, 1999. "Geography, Industrial Organization, and Agglomeration," Center for Policy Research Working Papers 14, Center for Policy Research, Maxwell School, Syracuse University.
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  8. Antonio Ciccone & Robert E. Hall, 1995. "Productivity and the density of economic activity," Economics Working Papers 120, Department of Economics and Business, Universitat Pompeu Fabra.
  9. Michael T. Owyang & Jeremy M. Piger & Howard J. Wall, 2004. "Business cycle phases in U.S. states," Working Papers 2003-011, Federal Reserve Bank of St. Louis.
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  18. David Genesove & Christopher Mayer, . "Loss Aversion and Seller Behavior: Evidence from the Housing Market," Zell/Lurie Center Working Papers 323, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  19. Edward L. Glaeser, 2005. "Urban Colossus: Why is New York America's Largest City?," NBER Working Papers 11398, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Rubén Hernández-Murillo & Michael T. Owyang & Margarita Rubio, 2013. "Clustered housing cycles," Working Papers 2013-021, Federal Reserve Bank of St. Louis.
    • Rubén Hernández-Murillo & Michael T Owyang & Margarita Rubio, 2013. "Clustered Housing Cycles," Discussion Papers 2013/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  2. 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, issue Oct, pages 15-29.
  3. James D. Hamilton & Michael T. Owyang, 2011. "The Propagation of Regional Recessions," NBER Working Papers 16657, National Bureau of Economic Research, Inc.
  4. Andra C. Ghent & Michael T. Owyang, 2009. "Is housing the business cycle? evidence from U.S. cities," Working Papers 2009-007, Federal Reserve Bank of St. Louis.
  5. Wall, Howard J., 2011. "The Employment Cycles of Neighboring Cities," MPRA Paper 29410, University Library of Munich, Germany.
  6. Michael T. Owyang & Jeremy M. Piger & Howard J. Wall, 2010. "Discordant city employment cycles," Working Papers 2010-019, Federal Reserve Bank of St. Louis.
  7. Neville Francis & Michael T. Owyang & Tatevik Sekhposyan, 2009. "The local effects of monetary policy," Working Papers 2009-048, Federal Reserve Bank of St. Louis.
  8. Leora Friedberg & Michael Owyang & Anthony Webb, 2008. "Identifying Local Differences in Retirement Patterns," Working Papers, Center for Retirement Research at Boston College wp2008-18, Center for Retirement Research, revised Dec 2008.

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