A Test of the Regional Growth-Instability Frontier Using State Data

Siddharth Chandra

Land Economics, 2002, vol. 78, issue 3, 442-462

Abstract: The application of the portfolio framework to the economy predicts the existence of a convex growth-instability frontier. Using two data sets on Gross State Product for the states of the United States, this hypothesis is tested. The tests confirm the existence of a convex frontier for economic growth and instability. The shape of the frontier is estimated, and growth-adjusted measures of economic instability based on the frontier are computed. Over long periods of time, economic instability is negatively correlated with a range of measures of economic diversity, providing further support for the portfolio view of economic growth.

JEL-codes: R11 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (14)

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