Regional Convergence and Aggregate Business Cycle in the United States

Abstract

MAGRINI S., GEROLIMETTO M. and ENGIN DURAN H. Regional convergence and aggregate business cycle in the United States, Regional Studies. The existing literature on convergence largely ignores the effect of aggregate fluctuations on the evolution of income disparities. However, if regional disparities follow a distinct cyclical pattern in the short run, the period of analysis should be chosen with great care to avoid distortions in the results. By analysing convergence among forty-eight conterminous US states through the distribution dynamics approach, it is shown that these distortions could be quite sizeable. Moreover, when convergence is analysed over an appropriate period that includes only complete cycles (1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007), results show that regional disparities exhibit a pro-cyclical behaviour and that the underlying long-run tendency is towards divergence. ConvergenceRegional Dans une large mesure, la documentation actuelle sur la convergence ne tient pas compte de l'effet des fluctuations globales sur le développement des inégalités de revenu. Cependant, si les inégalités régionales présentent des tendances cycliques très nettes à court terme, il faut déterminer la période à étudier avec prudence afin d'éviter des résultats erronés. En analysant la convergence à partir de quarante-huit états contigus aux États-Unis par moyen de la façon dynamiques de distribution, on montre que ces résultats erronés pourraient s'avérer assez importants. En outre, quand on analyse la convergence sur une période appropriée qui ne comprend que des cycles économiques complets (entre 1987 et 2007), les résultats laissent voir que les inégalités régionales présentent un comportement procyclique et que la tendance sous-jacente à long terme est à la divergence. KonvergenzRegionale Disparitäten Geschäftszyklus Distributionsdynamik MAGRINI S., GEROLIMETTO M. y ENGIN DURAN H. Convergencia regional y el ciclo comercial agregado en los Estados Unidos, Regional Studies. En la actual bibliografía sobre la convergencia se ignora en gran medida el efecto de las fluctuaciones agregadas en lo que respecta a la evolución de las desigualdades de ingresos. Sin embargo, si las desigualdades regionales siguen a corto plazo un Regional Studies, 2015 Vol. 49, No. 2, 251-272, http://dx.doi.org/10.1080/00343404.2013 © 2013 Regional Studies Association http://www.regionalstudies.org patrón cíclico destacado, habría que elegir el periodo de análisis con sumo cuidado para evitar distorsiones en los resultados. Al examinar la convergencia entre cuarenta y ocho Estados limítrofes de los Estados Unidos mediante un enfoque sobre las dinámicas de distribución, demostramos que estas desigualdades podrían ser bastante considerables. Además, si analizamos la convergencia de un periodo apropiado incluyendo solamente ciclos completos (1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004)(2005)(2006)(2007), los resultados in...

A Novel Look at Long-run Convergence Dynamics in the United States

“…Drawing on Magrini et al (2013), the expectation is that, if the filtering procedure does not spuriously modify convergence dynamics, substantially the same result should be found using both raw and HPfiltered data over sub-periods stretching between two corresponding points along the cycle (e.g., a peak-to-peak sub-period). In addition, given that disparities follow a pro-cyclical behavior in these years (Duran, 2014), we expect the dynamics estimated from raw data to be biased against convergence when a slowdown phase is removed (e.g., a trough-to-peak subperiod), and towards convergence when an expansion is removed (e.g., a peak-to-trough subperiod).…”

“…Our approach has two main advantages: firstly, it allows to unbiasedly analyze convergence over any possible period rather than over periods rigidly determined by turning points (as in Magrini et al, 2013) and 2010 and report a strong tendency towards convergence up to the beginning of the 1970s followed, from the beginning of the 1980s, by a phase of sizeable divergence.…”

“…Section 2 presents a new method for the analysis of convergence that allows for short-run fluctuations in the disparities. The validity of this method is then demonstrated in Section 3 through a comparison with the results for the 1989-4 2007 period documented in Magrini et al (2013). In the same section, we also study convergence dynamics in the US using annual data on real personal per capita income for 48 conterminous states and identify three distinct phases: a phase of very strong convergence that runs from 1930 to 1970, a phase of substantial persistence across the oil crises and a phase of divergence between 1981 and 2010.…”

Distribution Dynamics in the US. A Spatial Perspective

“…As shown in Magrini et al (2015) and Gerolimetto and Magrini (2014), when regional disparities follow a distinct cyclical pattern in the short-run, results from convergence analysis could be a↵ected by sizeable distortions if the analyzed period includes incomplete cycles. In order to avoid this bias, we resort to the approach in Gerolimetto and Magrini (2014) and begin the analysis by extracting the trend from each of the 48 quarterly per capita personal income series using the Hodrick-Prescott filter (Hodrick and Prescott, 1997).…”

A spatial analysis of employment multipliers in the US

“…a weighted average of statewide employment growth by 84 industries (classified according to the 1990 Census Bureau industrial classification scheme) within the tradable sector, with weights reflecting their location-specific employment share in 1980. While Moretti (2010) employs nationwide counterfactual tradable employment growth, we opt for statewise growth because the type of policy interventions considered here are at times implemented at the State level; in addition, the timing of business cycles differs substantially across States (Magrini et al 2015).…”