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Economic Development and Volatility among the States


  • Thomas Grennes

    () (North Carolina State University)

  • Pablo Guerron-quintana

    () (Federal Reserve Bank of Philadelphia)

  • Asli Leblebicioglu

    () (North Carolina State University)


Using state level personal income, we empirically demonstrate the importance of economic development and diversification for the changes in volatility. We show that volatility of income growth is initially decreasing in the level of income and the degree of diversification. Yet, as state income continues rising, its volatility starts increasing. We also find that expansion of interstate banking and the size of the service sector are among the factors that have influenced volatility.

Suggested Citation

  • Thomas Grennes & Pablo Guerron-quintana & Asli Leblebicioglu, 2010. "Economic Development and Volatility among the States," Economics Bulletin, AccessEcon, vol. 30(3), pages 1963-1976.
  • Handle: RePEc:ebl:ecbull:eb-10-00391

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    References listed on IDEAS

    1. María José Luengo-Prado & Bent E. Sørensen, 2008. "What Can Explain Excess Smoothness and Sensitivity of State-Level Consumption?," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 65-80, February.
    2. Sebnem Kalemli-Ozcan & Bent E. Sørensen & Oved Yosha, 2003. "Risk Sharing and Industrial Specialization: Regional and International Evidence," American Economic Review, American Economic Association, vol. 93(3), pages 903-918, June.
    3. Del Negro, Marco, 2002. "Asymmetric shocks among U.S. states," Journal of International Economics, Elsevier, vol. 56(2), pages 273-297, March.
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    More about this item


    State Level Moderation; Economic Development; Specialization;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles


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