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The cyclical behavior of regional per capita incomes in the postwar period

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  • Gerald Carlino
  • Keith Sill

Abstract

This paper examines the cyclical dynamics of per capita personal income for the major U.S. regions during the 1953:3-95:2 period. The analysis reveals considerable differences in the volatility of regional cycles. Controlling for differences in volatility, the authors find a great deal of comovement in the cyclical response of four regions (New England, Southeast, Southwest, and Far West), which the authors call the core region, and the nation. The authors also find a great deal of comovement between the Mideast and Plains regions, but these regions are only weakly correlated with national movements. The cyclical response of the Great Lakes region is markedly different from that of the other regions and the nation. Possible sources underlying differences in regional cycles are explored, such as the share of a region's income accounted for by manufacturing, defense spending as a proportion of a region's income, oil price shocks, and the stance of monetary policy. Somewhat surprisingly, the authors find that the share of manufacturing in a region seems to account for little of the variation in regional cycles.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 98-11.

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Date of creation: 1998
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Handle: RePEc:fip:fedpwp:98-11

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Keywords: Economic history ; Income;

References

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  1. Gonzalo, Jesus & Granger, Clive W J, 1995. "Estimation of Common Long-Memory Components in Cointegrated Systems," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 13(1), pages 27-35, January.
  2. Hooker, Mark A & Knetter, Michael M, 1997. "The Effects of Military Spending on Economic Activity: Evidence from State Procurement Spending," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 29(3), pages 400-421, August.
  3. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  4. Boschen, John F & Mills, Leonard O, 1995. "The Relation between Narrative and Money Market Indicators of Monetary Policy," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 33(1), pages 24-44, January.
  5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 12(2-3), pages 231-254.
  6. Quah, Danny, 1995. "Aggregate and Regional Disaggregate Fluctuations," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1236, C.E.P.R. Discussion Papers.
  7. Danny Quah, 1996. "Aggregate and regional disaggregate fluctuations," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2081, London School of Economics and Political Science, LSE Library.
  8. Gerald Carlino & Robert Defina, 1998. "The Differential Regional Effects Of Monetary Policy," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 80(4), pages 572-587, November.
  9. Danny Quah, 1996. "Aggregate and Regional Disaggregate Fluctuations," CEP Discussion Papers, Centre for Economic Performance, LSE dp0275, Centre for Economic Performance, LSE.
  10. Coulson, N.E. & Rushen, S.F., 1993. "Sources of Fluctuations in the Boston Economy," Papers, Pennsylvania State - Department of Economics 4-93-5, Pennsylvania State - Department of Economics.
  11. Carolyn Sherwood-Call, 1988. "Exploring the relationships between national and regional economic fluctuations," Economic Review, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco, issue Sum, pages 15-25.
  12. Vahid, F & Engle, Robert F, 1993. "Common Trends and Common Cycles," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 8(4), pages 341-60, Oct.-Dec..
  13. Steven J. Davis & Prakash Loungani & Ramamohan Mahidhara, 1997. "Regional labor fluctuations: oil shocks, military spending, and other driving forces," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 578, Board of Governors of the Federal Reserve System (U.S.).
  14. Robert F. Engle & Sharon Kozicki, 1990. "Testing For Common Features," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0091, National Bureau of Economic Research, Inc.
  15. Vahid, Farshid & Engle, Robert F., 1997. "Codependent cycles," Journal of Econometrics, Elsevier, Elsevier, vol. 80(2), pages 199-221, October.
  16. Engle, Robert F. & Issler, Joao Victor, 1995. "Estimating common sectoral cycles," Journal of Monetary Economics, Elsevier, Elsevier, vol. 35(1), pages 83-113, February.
  17. Carlino Gerald & Defina Robert, 1995. "Regional Income Dynamics," Journal of Urban Economics, Elsevier, vol. 37(1), pages 88-106, January.
  18. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 90(4), pages 777-93, August.
  19. Brian A. Cromwell, 1992. "Does California drive the West? an econometric investigation of regional spillovers," Economic Review, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco, pages 13-23.
  20. Coulson N. Edward, 1993. "The Sources of Sectoral Fluctuations in Metropolitan Areas," Journal of Urban Economics, Elsevier, vol. 33(1), pages 76-94, January.
  21. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, Elsevier, vol. 10(2), pages 139-162.
  22. Long, John B, Jr & Plosser, Charles I, 1987. "Sectoral vs. Aggregate Shocks in the Business Cycle," American Economic Review, American Economic Association, American Economic Association, vol. 77(2), pages 333-36, May.
  23. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, Econometric Society, vol. 59(6), pages 1551-80, November.
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Citations

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Cited by:
  1. S. Rebelo., 2010. "Real Business Cycle Models: Past, Present, and Future," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 10.
  2. Marco Del Negro, 1999. "Asymmetric shocks among U.S. states," Working Papers, Centro de Investigacion Economica, ITAM 9903, Centro de Investigacion Economica, ITAM.
  3. Igor Esteban Zuccardi Huertas, 2002. "Los ciclos económicos regionales en Colombia, 1986-2000," DOCUMENTOS DE TRABAJO SOBRE ECONOMÍA REGIONAL, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL 003159, BANCO DE LA REPÚBLICA - ECONOMÍA REGIONAL.
  4. Sergio Rebelo, 2005. "Business Cycles," Annals of Economics and Finance, Society for AEF, Society for AEF, vol. 6(2), pages 229-250, November.
  5. Andres Rodríguez-Pose & Ugo Fratesi, 2003. "Regional economic cycles and the emergence of sheltered economies in the periphery of the EU," ERSA conference papers, European Regional Science Association ersa03p189, European Regional Science Association.

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