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Common trends and common cycles in regional per capita incomes

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  • Gerald A. Carlino
  • Keith Sill

Abstract

Cyclical dynamics at the regional level are investigated using newly developed times-series techniques that allow a decomposition of aggregate data into common trends and common cycles. The authors apply the common-trend/common-cycle representation to per capita personal income for the eight BEA regions using quarterly data for the period 1948:1-93:4. Their 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, Mideast, Great Lakes, and Southeast), which they call the core region, and the nation. The authors find some evidence of comovement of the Plains, Rocky Mountain, and Far West regions and the nation, but to a much lesser extent than the comovement among the core regions and the nation. Finally, the cyclical response of the Southwest region is strongly negatively correlated with that of all the other regions and the nation.

Suggested Citation

  • Gerald A. Carlino & Keith Sill, 1996. "Common trends and common cycles in regional per capita incomes," Working Papers 96-13, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:96-13
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    References listed on IDEAS

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    Cited by:

    1. Athanasopoulos, George & Issler, João Victor & Guillen, Osmani Teixeira Carvalho, 2005. "Forecasting accuracy and estimation uncertainty using VAR models with short- and long-term economic restrictions: a Monte-Carlo study," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 589, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    2. Vahid, Farshid & Issler, Joao Victor, 2002. "The importance of common cyclical features in VAR analysis: a Monte-Carlo study," Journal of Econometrics, Elsevier, vol. 109(2), pages 341-363, August.
    3. Gerald A. Carlino & Keith Sill, 1997. "Regional economies: separating trends from cycles," Business Review, Federal Reserve Bank of Philadelphia, issue May, pages 19-31.

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