Comovement in Cities
Recent research has shown that industries that locate together in space also move together over the business cycle, and that this correspondence between spatial and temporal comovement is important to aggregate volatility. This paper asks whether this correspondence is due to local common shocks or to local spillovers. I examine interindustry comovements within seven large US cities, and find strong evidence for local spillovers. I estimate that local spillovers explain roughly one-third of manufacturing employment volatility at the city level. Local spillovers do not appear to result from transport costs and locally traded goods.
|Date of creation:||Oct 1995|
|Publication status:||published as Carnegie-Rochester Conference Series on Public Policy, vol.44, pp.169-206, June 1996|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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