MEASURES OF DIVERSIFICATION: PREDICTORS OF REGIONAL ECONOMIC INSTABILITY*

This work focuses on determining which measure of regional economic diversification best explains differences in economic instability across regions. One recent article found that a portfolio variance measure had the highest explanatory power. Another researcher found that an entropy measure was best after the model was corrected for heteroscedasticity. Results presented here indicate that, after correction for heteroscedasticity, portfolio variance once again displays the greatest power to explain cross-sectional variation in observed regional instability.     

REGIONAL INDUSTRIAL STRUCTURE AND ECONOMIC GROWTH AND INSTABILITY*

ABSTRACT. National and regional employment patterns are subject to growth-instability tradeoffs. This paper applies the portfolio selection model to detailed employment data for the U.S. economy and selected states. Empirical results indicate that growth-instability trade-offs exist in a form not previously understood. The paper also identifies growth and stabilization potential by identifying stabilizing sectors.     

THE BEHAVIORAL COSTS OF ECONOMIC INSTABILITY*

This paper reviews the literature reporting a connection between economic change and behavioral disorder. The literature is separated into individual and aggregate based research and the methodological issues raised by each approach are described. The implications of the research findings for illness prevention, remedial services and economic policy making are discussed. The authors argue that the social costs of mobile capital should be accounted and internalized because social justice as well as Economic and Psychological theory assume that an individual should bear the costs of his or her behavior.     

THE CONCEPTUAL LINKS BETWEEN RECREATION SITE DEVELOPMENT AND REGIONAL ECONOMIC IMPACTS*

ABSTRACT. Assessing regional economic impacts of recreation trips is important to public agencies' decisions about using recreation as a rural development tool. Minimizing the total cost of recreation trip production implies that households will spatially distribute their purchases of inputs to trip production, including both trip-specific inputs and durable recreation equipment. A recreation site contributes to a region's economic growth through household purchases of trip inputs. The site's cost effects, price information effects, and recreation and retail agglomeration effects cause changes in household recreation purchases and ultimately generate regional economic impacts.     

A DYNAMIC INTRSECTORAL,MODEL OF REGIONAL ECONOMIC GROWTH*

ABSTRACT. The dynamic relationship between sectoral value added and regional economic growth is analyzed using a stochastic intersectoral model estimated by ordinary least squares and linear systems techniques. A state-space portion of the model identifies the time element of sedoral value added. Dynamic multipliers, tracing the temporal path of regional growth, are calculated for the state of Georgia over the period 1963–1986. This application shows that the impacts of sectoral shocks can follow cyclical as well as monotonic patterns and that the direction and magnitude of the impact may change over time.     

WORKER DISPLACEMENT AND JOB-SEARCH: A REGIONAL ANALYSIS OF STRUCTURAL IMPEDIMENTS TO REEMPLOYMENT*

ABSTRACT. This study investigates the human, and in turn the regional, consequences of industrial restructuring in the United States. Our methodology presumes that labor market outcomes of displaced workers can provide considerable information on the structural properties of local labor markets, and subsequently upon the capacity of such areas/regions to reemploy additional workers. The examination follows two steps. In the first, a multivariate model of reemployment likelihood is developed and subsequently estimated. Separate equations are obtained for various resons of the country, a disaggregation that permits one to identify how postdisplacement reemployment, and its determinants, vary systematically across space. In the second step, the above estimates are decomposed into two elements, one of which is reflective of regional structural conditions. Based upon this methodology and estimates obtained in the first step, regions of the country are compared as to magnitude of their structural economic problems, and thus as to their capacity to gainfully reemploy additional workers displaced by plant closure or relocation.     

SPATIAL DEPENDENCE AND SPATIAL STRUCTURAL INSTABILITY IN APPLIED REGRESSION ANALYSIS*

The stability of regression coefficients over the observation set (“regional homogeneity”) is typically assessed by means of a Chow test or within a seemingly unrelated regression (SUR) framework. When spatial error autocorrelation is present in cross-sectional equations the traditional tests are no longer applicable. I evaluate this both in formal terms as well as empirically. I introduce a taxonomy of spatial effects in models for structural instability, and discuss its implication for testing. I compare the performance of traditional tests, robust approaches, maximum-likelihood procedures and pretest techniques by means of a series of simple Monte Carlo experiments.     

A MIXED-FREQUENCY MODEL OF REGIONAL OUTPUT*

ABSTRACT. This paper proposes a new method for estimating a monthly regional production model. The technique involves treating the region's monthly industrial output as a latent variable, which is in turn a function of capital (prosed by energy usage) and labor inputs. Annual observations on regional value added correspond to the summation of the unobservable monthly series over the 12 months, while changes in the national Industrial Production index help infer the series' month-to-month fluctuations. The model is estimated using the Kalman filter and the method of maximum likelihood. The estimates are used to compute monthly indices of regional value added for 15 individual 2-digit industries, and for the aggregate manufacturing sector in the Seventh Federal Reserve District. In a comparison of out-of-sample forecasting accuracy, the mixed-frequency model outperforms both the traditional parametric Cobb-Douglas and nonparametric Atlanta methods over the 1988–89 forecasting horizon.     

MODELING DYNAMIC INTERINDUSTRY REGIONAL GROWTH IN THE PRESENCE OF STRUCTURAL SHIFTS AND OUTLIERS*

ABSTRACT. Kraybill and Dorfman (1992) propose a model of intermediate and export demand which uses ordinary least-squares and linear systems techniques to produce a state-space representation of the time element of output change. Their model produces dynamic multipliers which trace the temporal path of regional growth, and has many advantages over previously employed time series methods. This study extends their methodology to accommodate structural shifts and outliers found in the least-squares relationship between industry and export output by using a recently-introduced technique–multiprocess mixture estimation. An application of the Kraybill-Dorfman method and the extensions proposed here to monthly time series data on Ohio employment is used to illustrate these issues.     

EMPLOYMENT CYCLES AND PROCESS INNOVATION IN REGIONAL STRUCTURAL CHANGE*

Regional employment cycles, the demand for skilled and unskilled labor, and process innovations are analyzed in the context of an industry product cycle. Employment fluctuations caused by endogenous technological change lead to spatial decentralization of production facilities through capital relocation and spatial divisions of labor. A capital investment profile suggested by the product cycle scenario is related to employment cycles. A price system for output is outlined in terms of wages and profits over the product cycle.