Macroeconomic Shocks and Regional Employment: The Case of Southern California
In this study, we specify a disaggregated vector autoregression model (VAR) to analyze the behavior of employment in three Southern California counties during two different types of aggregate economic downturns. Using this model, we estimate the impact of hypothetical, one-time shocks to macroeconomic variables, on employment levels by county. The two adverse shocks that we examine are a monetary (demand) shock, and an oil price (supply) shock. Our empirical framework allows us to examine, within a single model, the dynamic behavior of employment during these downturns. We provide evidence that even within regional economies in the United States, employment levels respond differentially to macroeconomic shocks. Our model also allows us to examine how the impact of these shocks on total county employment has changed over time. In particular, we find that, over the sample period, total employment across Southern California has become less sensitive to oil price shocks.
Volume (Year): 35 (2005)
Issue (Month): 2 ()
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- Gerald Carlino & Robert Defina, 1998. "The Differential Regional Effects Of Monetary Policy," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 572-587, November.
- Barth, Marvin J III & Ramey, Valerie A, 2000.
"The Cost Channel of Monetary Transmissions,"
University of California at San Diego, Economics Working Paper Series
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- Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
- Ivo J.M. Arnold, 2013.
"The industry effects of monetary policy and their welfare implications,"
Banca Nazionale del Lavoro Quarterly Review,
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- Ivo J.M. Arnold, 2013. "The industry effects of monetary policy and their welfare implications," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 53(214), pages 287-315.
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