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Toward An Improved Portfolio Variance Measure Of Regional Economic Stability

Author

Listed:
  • Paul B. Siegel

    (University of Tennessee, Knoxville)

  • Jeffrey Alwang

    (Virginia Tech)

  • Thomas G. Johnson

    (Virginia Tech)

Abstract

The portfolio variance has gained popularity as a tool to evaluate alternative strategies that promote regional economic stability. As it is commonly applied, however, the portfolio variance has several problems that limit its appropriateness for regional economic analysis. There are several implicit assumptions about the relationship between structural change and stability, and about the emphasis on aggregate region-wide stability that should be recognized when using the portfolio variance approach to predict the impact of alternative diversification strategies. These assumptions and their implications are discussed, and an improved portfolio variance measure of regional economic stability is presented.

Suggested Citation

  • Paul B. Siegel & Jeffrey Alwang & Thomas G. Johnson, 1994. "Toward An Improved Portfolio Variance Measure Of Regional Economic Stability," The Review of Regional Studies, Southern Regional Science Association, vol. 24(1), pages 71-86, Summer.
    • Handle: RePEc:rre:publsh:v24:y:1994:i:1:p:71-86
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    Cited by:

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    2. J. C. Dissart, 2003. "Regional Economic Diversity and Regional Economic Stability: Research Results and Agenda," International Regional Science Review, , vol. 26(4), pages 423-446, October.
    3. Joya, Omar, 2015. "Growth and volatility in resource-rich countries: Does diversification help?," Structural Change and Economic Dynamics, Elsevier, vol. 35(C), pages 38-55.
    4. Baldwin, John R. Brown, W. Mark, 2003. "Volatilité de l'emploi au niveau régional dans le secteur canadien de la fabrication : les effets de la spécialisation et du commerce," Série de documents de recherche sur l'analyse économique (AE) 2003005f, Statistics Canada, Direction des études analytiques.
    5. Alley, Ibrahim, 2018. "Oil price and USD-Naira exchange rate crash: Can economic diversification save the Naira?," Energy Policy, Elsevier, vol. 118(C), pages 245-256.
    6. Danie Francois Toerien, 2022. "Temporal and Geographic Stress Testing of Entrepreneurial Proportionalities in United States Counties," World, MDPI, vol. 3(3), pages 1-31, July.
    7. John Baldwin & W. Brown, 2004. "Regional manufacturing employment volatility in Canada: The effects of specialisation and trade," Economics of Governance, Springer, vol. 83(3), pages 519-541, July.
    8. Marina Yurievna Malkina, 2018. "Instability of Financial Return of Regional Economies and Its Determinants," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 3, pages 88-114.
    9. Barth, James R. & Benefield, Justin D. & Hollans, Harris, 2015. "Industry Concentration and Regional Housing Market Performance," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 45(2).
    10. Nissan, Edward & Carter, George, 2010. "States' Nonagricultural Employment at the 3-Digit North American Industry Classification System (NAICS) Level," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(1), pages 1-13.
    11. Xin Mai & Roger C. K. Chan & Chaoqun Zhan, 2019. "Which Sectors Really Matter for a Resilient Chinese Economy? A Structural Decomposition Analysis," Sustainability, MDPI, vol. 11(22), pages 1-17, November.
    12. Fritz, Oliver, 1999. "Optimal Management of a Regional Income and Pollution Portfolio," ERSA conference papers ersa99pa187, European Regional Science Association.
    13. Wagner, John E., 2000. "Regional Economic Diversity: Action, Concept, or State of Confusion," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 30(2), pages 1-22.
    14. Edward Nissan & George Carter, 2001. "Convergence-divergence of U.S. State unemployment rates," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 25(2), pages 172-180, June.
    15. Elton Beqiraj & Giovanni Di Bartolomeo & Marco Di Pietro & Carolina Serpieri, 2017. "Resilience, crisis contagion, and vulnerability in Central Europe and the Baltics," JRC Research Reports JRC109632, Joint Research Centre.
    16. Ron Martin & Peter Sunley & Ben Gardiner & Peter Tyler, 2016. "How Regions React to Recessions: Resilience and the Role of Economic Structure," Regional Studies, Taylor & Francis Journals, vol. 50(4), pages 561-585, April.
    17. Steven Deller & Philip Watson, 2016. "Did Regional Economic Diversity Influence The Effects Of The Great Recession?," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1824-1838, October.
    18. Coulson, N. Edward & McCoy, Shawn J. & McDonough, Ian K., 2020. "Economic diversification and the resiliency hypothesis: Evidence from the impact of natural disasters on regional housing values," Regional Science and Urban Economics, Elsevier, vol. 85(C).
    19. Nakorji Musa & Oji-okoro Izuchukwu & Seyi Saint Akadiri, 2024. "Assessment of exchange rate determination in a mono-resource economy: A case of Nigeria," Journal of Economic Analysis, Anser Press, vol. 3(2), pages 101-120, June.
    20. Beqiraj, Elton & Di Bartolomeo, Giovanni & Di Pietro, Marco & Serpieri, Carolina, 2018. "Comparing Central Europe and the Baltic macro-economies: A Bayesian approach," EconStor Preprints 175242, ZBW - Leibniz Information Centre for Economics.
    21. Randall Jackson, 2015. "Fellows Address: Are Industry Clusters and Diversity Strange Bedfellows?," Working Papers Working Paper 2015-04, Regional Research Institute, West Virginia University.

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