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The Effect of Monetary and Fiscal Policies on Regional Business Cycles

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  • Charles B. Garrison

    (Department of Economics The University of Tennessee Knoxville, Tennessee 37916 USA)

  • Hui S. Chang

    (Department of Economics The University of Tennessee Knoxville, Tennessee 37916 USA)

Abstract

A Keynesian reduced-form quarterly model of regional income determination is constructed and tested for the eight regions of the United States. The results support the view that national economic policy exerts a significant direct influence on a region's export earnings. The findings are in conflict with some monetarist models, in that fiscal policy, as well as monetary policy, strongly influences regional basic economic activity. Also, the findings suggest the desirability of incorporating national policy variables into regional econometric models.

Suggested Citation

  • Charles B. Garrison & Hui S. Chang, 1979. "The Effect of Monetary and Fiscal Policies on Regional Business Cycles," International Regional Science Review, , vol. 4(2), pages 167-180, December.
    • Handle: RePEc:sae:inrsre:v:4:y:1979:i:2:p:167-180
    DOI: 10.1177/016001767900400206
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    References listed on IDEAS

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    Cited by:

    1. Angeliki ANAGNOSTOU & Stephanos PAPADAMOU, 2014. "The Impact Of Monetary Shocks On Regional Output: Evidence From Four South Eurozone Countries," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 39, pages 105-130.
    2. Gauger, Jean & Schunk, Don, 2002. "Predicting Regional Recessions Via the Yield Spread," The Review of Regional Studies, Southern Regional Science Association, vol. 32(2), pages 151-170, Summer/Fa.
    3. Masagus M. Ridhwan & Henri L. F. Groot & Piet Rietveld & Peter Nijkamp, 2014. "The Regional Impact of Monetary Policy in Indonesia," Growth and Change, Wiley Blackwell, vol. 45(2), pages 240-262, June.
    4. Orley M. Amos & Majid Kermani & John R. Wingender, 1994. "An Empirical Test Of The Interaction Between Regional Financial Markets And Regional Growth," The Review of Regional Studies, Southern Regional Science Association, vol. 24(1), pages 55-69, Summer.
    5. Theodore M. Crone, 2004. "A redefinition of economic regions in the U.S," Working Papers 04-12, Federal Reserve Bank of Philadelphia.
    6. Masagus M. Ridhwan & Henri L.F. de Groot & Peter Nijkamp, 2010. "The Impact of Monetary Policy on Economic Activity - Evidence from a Meta-Analysis," Tinbergen Institute Discussion Papers 10-043/3, Tinbergen Institute.
    7. Theodore M. Crone, 2003. "An alternative definition of economic regions in the U.S. based on similarities in state business cycles," Working Papers 03-23, Federal Reserve Bank of Philadelphia.
    8. Ridhwan, M.M. & Nijkamp, P. & Rietveld, P., 2008. "Regional development and monetary policy : a review of the role of monetary unions, capital mobility and locational effects," Serie Research Memoranda 0007, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.

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