The propagation of regional recessions

James D. Hamilton and Michael T. Owyang ()

No 2009-013, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper develops a framework for inferring common Markov-switching components in a panel data set with large cross-section and time-series dimensions. We apply the framework to studying similarities and differences across U.S. states in the timing of business cycles. We hypothesize that there exists a small number of cluster designations, with individual states in a given cluster sharing certain business cycle characteristics. We find that although oil-producing and agricultural states can sometimes experience a separate recession from the rest of the United States, for the most part, differences across states appear to be a matter of timing, with some states entering recession or recovering before others.

Keywords: Business cycles; Recessions (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cba, nep-ecm and nep-mac
Date: 2009
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