Is the United States an optimum currency area? an empirical analysis of regional business cycles

Michael Kouparitsas ()

No WP-01-22, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: This paper develops a statistical model to study the business cycles of the eight U.S. BEA regions. By combining unobserved component and VAR techniques I identify not only common and idiosyncratic sources of innovation, but also common and idiosyncratic responses to common shocks. Using this model, I show, at the usual levels of statistical significance, that U.S. regions deviate significantly from Mundell's notion of an optimum currency area. I identify five core regions that have similar sources of disturbances and responses to disturbances (New England, Mideast, Great Lakes, Rocky Mountains and Far West) and three non-core regions that differ significantly from the core in their sources of disturbances and/or responses to disturbances (Southeast, Plains and Southwest), at business cycle frequencies.

Keywords: Business cycles; Currency convertibility (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-ifn, nep-mon and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Downloads: (external link)
http://www.chicagofed.org/digital_assets/publicati ... s/2001/Wp2001-22.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedhwp:wp-01-22

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper Series from Federal Reserve Bank of Chicago Contact information at EDIRC.
Bibliographic data for series maintained by Lauren Wiese ().