Abstract
This paper models fluctuations in regional disaggregates as a nonstationary, dynamically evolving distribution. Doing so enables study of the dynamics of aggregate fluctuations jointly with those of the rich cross-section of regional disaggregates. For the US, the leading state—regardless of which it happens to be—contains strong predictive power for aggregate fluctuations. This effect is difficult to understand if only aggregate disturbances affect aggregate business cycles through aggregate propagation mechanisms. Instead, a better picture might be one of a “wave” of regional dynamics, rippling across the national economy.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Atkinson AB (1970) On the measurement of inequality. Journal of Economic Theory 2(3):244–263
Barro RJ, Sala-i-Martin X (1991) Convergence across states and regions.Brookings Papers on Economic Activity 1:107–182
Blanchard OJ, Katz LF (1992) Regional evolutions. Brookings Papers on Economic Activity 1:1–75
Blanchard OJ, Quah D (1989) The dynamic effects of aggregate demand and supply disturbances. American Economic Review 79(4):655–673
Carlino GA, Mills L (1993) Are US regional incomes converging? A time series analysis. Journal of Monetary Economics 32(2):335–346
Ciccone A, Hall RE (1993) Productivity and the density of economic activity. Working Paper E-93-6, Hoover Institution, California 94305
Davis SJ, Haltiwanger J (1992) Gross job creation, gross job destruction, and employment reallocation. Quarterly Journal of Economics 107(3):819–863
Durlauf SN (1993) Nonergodic economic growth. Review of Economic Studies 60(2):349–366
Durlauf SN, Johnson P (1994) Nonlinearities in integenerational income mobility. Working paper, University of Wisconsin, Economics Department, Madison WI 53706
Engle RF, Kozicki S (1993) Testing for common features. Journal of Business and Economic Statistics 11(4):369–380
Evans GW (1993) Sectoral imbalance and unemployment in the United Kingdom 1963–84. Oxford Economic Papers 45:440–456
Galor O, Zeira J (1993) Income distribution and macroeconomics. Review of Economic Studies 60(1):35–52
Geweke J, Marshall RC, Zarkin GA (1986) Mobility indices in continuous time markov chains. Econometrica 54(6):1407–1423
Krugman P, Venables AJ (1993) Integration, specialization, and adjustment. Working paper, LSE
Lach S, Tsiddon D (1992) The behavior of prices and inflation: An empirical analysis of disaggregated price data. Journal of Political Economy 100(2):349–389
Lilien DM (1982) Sectoral shifts and cyclical unemployment. Journal of Political Economy 90(4): 777–793
Lillard LA, Willis RJ (1978) Dynamic aspects of earning mobility. Econometrica 46(5):985–1012
Long JB, Plosser CI (1983) Real business cycles. Journal of Political Economy 91(1):39–69
Persson T, Tabellini G (1994) Is inequality harmful for growth? American Economic Review 84(3): 600–621
Pissarides CA, McMaster I (1990) Regional migration, wages, and unemployment: Empirical evidence and implications for policy. Oxford Economic Papers42:812–831
Prescott EC (1986) Theory ahead of business cycle measurement. Federal Reserve Bank of Minneapolis Quarterly Review 10(4):9–22
Quah D (1992) The relative importance of permanent and transitory components: Identification and some theoretical bounds. Econometrica 60(1):107–118
Quah D (1994) One business cycle and one trend from (many,) many disaggregates. European Economic Review 38(3/4):605–613
Quah D (1995a) Coarse distribution dynamics for convergence, divergence, and polarization. Working paper, Economics Department, LSE
Quah D (1995b) International patterns of growth: II. Persistence, path dependence, and sustained take-off in growth transition. Working paper, Economics Department, LSE
Quah D (1996a) Convergence empirics across economies with (some) capital mobility. Journal of Economic Growth 1(1) forthcoming
Quah D (1996b) Empirics for economic growth and convergence. European Economic Review 40 forthcoming
Quah D (1996c) Regional convergence clusters across europe. European Economic Review 40 forthcoming
Quah D, Sargent TJ (1993) A dynamic index model for large cross sections. In: Stock J, Watson M (eds) Business Cycles, Indicators, and Forecasting, volume 28, chapter 7, 285–306. University of Chicago Press and NBER, Chicago IL
Sargent TJ (1981) Interpreting economic time series. Journal of Political Economy 89(2):213–248
Sargent TJ, Sims CA (1977) Business cycle modelling without pretending to have too much a priori economic theory. In: Sims CA (ed) New Methods in Business Cycle Research.Federal Reserve Bank of Minneapolis, Minneapolis MN 55480
Shorrocks AF (1978) The measurement of mobility. Econometrica 46(5):1013–1024
Singer B, Spilerman S (1976) Some methodological issues in the analysis of longitudinal surveys. Annals of Economic and Social Measurement 5:447–474
Stokey NL (with Edward C. Prescott), Robert EL Jr (1989) Recursive methods in economic dynamics. Harvard University Press, Cambridge MA
Author information
Authors and Affiliations
Additional information
I thank IIES in Stockholm for its hospitality. I am grateful also to seminar participants at IIES, the LSE Macro Breakfast Group, and the University of Edinburgh, as well as Fischer Black, David Canning, Fabio Canova, and Costas Meghir for helpful suggestions. I owe special thanks to an anonymous referee who carefully read and helpfully criticized an earlier version of the paper. All calculations were performed using the author's econometrics shellt SrF.
Rights and permissions
About this article
Cite this article
Quah, D.T. Aggregate and regional disaggregate fluctuations. Empirical Economics 21, 137–159 (1996). https://doi.org/10.1007/BF01205497
Issue Date:
DOI: https://doi.org/10.1007/BF01205497