Working Paper

The Heterogeneous Effects of Global and National Business Cycles on Employment in U.S. States and Metropolitan Areas


Abstract: The growth of globalization in recent decades has increased the importance of external factors as drivers of the business cycle in many countries. Globalization affects countries not just at the macro level but at the level of states and metro areas as well. This paper isolates the relative importance of global, national and region-specific shocks as drivers of the business cycle in individual U.S. states and metro areas. We document significant heterogeneity in the sensitivity of states and metro areas to global shocks, and show that direct trade linkages are not the only channel through which the global business cycle impacts regional economies.

Keywords: U.S. state and metro employment fluctuations; Global VAR (GVAR) approach; Global and regional business cycles;

JEL Classification: F62; E24; E32; F66;

https://doi.org/10.24149/gwp343

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Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Globalization Institute Working Papers

Publication Date: 2018-08-22

Number: 343

Pages: 47 pages