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Asymmetric shocks among U.S. states

  • Marco Del Negro


    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

The paper uses a factor analysis model to study co-movements in non-durable consumption and output among the fifty U.S. states from 1969 to 1995. The paper finds that asymmetric shocks in output are, on average, large, i.e., of the same magnitude of U.S. business cycle fluctuations. Regional business cycles and state-specific shocks are equally important sources of asymmetries in output. Asymmetric shocks in consumption, excluding disturbances due to measurement error, are, on average, as large as asymmetric shocks to output, suggesting a lack of inter-state smoothing.

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Paper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number 9903.

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Length: 36 pages
Date of creation: Oct 1999
Date of revision:
Handle: RePEc:cie:wpaper:9903
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