The Effect of Monetary and Fiscal Policies on Regional Business Cycles

Garrison, Charles B.; Chang, Hui S.

doi:10.1177/016001767900400206

Cited by 35 publications

(25 citation statements)

References 14 publications

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“…Moreover, these spillovers tend to be geographically dispersed. Carlino and DeFina () indicated a shortcoming of existing literature examining the regional effects of monetary policy (Beare, ; Garrison and Chang, ; Mathur and Stein, , etc.) in their attempt to measure monetary policy impacts region by region with no consideration of spillover effects among regions.…”

Section: Literature Reviewmentioning

confidence: 99%

Regional Effects of Monetary Policy in China: Evidence From China's Provinces

Masron

2016

Bulletin of Econ Res

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This study examines the provincial effects of monetary policy from 1978 to 2011 in China. We used the SVAR method to measure the magnitude and timing of each province's response to monetary policy shocks when considering the influences of spillover effects among provinces. Then we also explored the regional effects of monetary policy employing multiple linear regressions. The results confirm that provinces respond differently to monetary policy actions. It was found that in the short run, the influence of spillover effects on a province's response is very important, but in the long run, the negative influence of deposit transfers overtake the positive impact of the spillover effect. For the factors causing the regional effects on monetary policy, the results show that the interest rate channel is rather weak at the regional level in China. The bank lending channel can explain the regional effects of monetary policy to some extent. Thus in China, the bank lending channel is more effective than the interest rate channel at the regional level.

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Section: Literature Reviewmentioning

confidence: 99%

Regional Effects of Monetary Policy in China: Evidence From China's Provinces

Masron

2016

Bulletin of Econ Res

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“…She also finds that local disturbances contribute significantly to regional cycles and recommends that more research be done on the spillover effects from region to region. Garrison and Chang (1979) investigate the effects of fiscal and monetary policies and find that fiscal and monetary policies have quite different impacts on different regions. In particular, federal fiscal and monetary policies have large impacts on regions with a large concentration on the manufacture of durable goods and smaller impacts on agricultural and mining regions.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The synchronization between regions is not predominantly due to a large common exogenous force: evidence has shown that fiscal and monetary policies are not strong enough to enforce synchronization, and they operate on different regions with different strengths and different timing, see Garrison and Chang (1979), Kozlowski (1995), and Hooker (1996). In addition, we cannot explain the synchronization by referring to a common national business cycle.…”

Section: Introductionmentioning

confidence: 99%

Mode-Locking and Regional Business Cycle Synchronization*

Selover¹,

Jensen²,

Kroll³

2005

J Regional Sci

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Business cycles in different regions of the United States tend to synchronize. This study investigates the reasons behind this synchronization of business cycles and the consequent formation of a national business cycle. Trade between regions may not be strong enough for one region to ''drive'' business cycle fluctuations in another region. This study suggests that regional business cycles synchronize due to a nonlinear ''mode-locking'' process in which weakly coupled oscillating systems (regions) tend to synchronize. There is no definitive test for mode-lock. However, simulations, correlations, Granger causality tests, tests for nonlinearities, vector autoregressions, and spectral analysis reveal modest econometric support for the regional mode-locking hypothesis of business cycle synchronization.

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“…The market clearing conditions (5), (6), (10), the factor market conditions (7), (8), (9), (11), (12), factor mobility condition (4), and the government's budget constraint (13) determine the solutions to the variables l k Y l c Y K k Y K c Y wY w H Y rY r H , gY P. The above equations are algebraically manipulated to yield the following equation in r.…”

Section: Decisions Of Households and ®Rmsmentioning

confidence: 99%

“…The Garrison and Chang (1979), and Amos (1992). Mathur and Stein (1980) studied the regional impact of both federal ®scal and monetary policies.…”

Section: Introductionmentioning

confidence: 99%

National and regional repercussions of regional reallocations of federal expenditures and public services

Mukherji¹,

Izraeli²

1999

The Annals of Regional Science

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This paper considers the problem of regional allocation of government funds in a two-region, two-good economy in which production of each good requires labor, capital, and a local public good. Changes in regional allocation of federal expenditures and public services are found to signi®cantly impact the national economy in addition to the regional economies. For example, output of both regions and the national economy may decrease (or increase) as a result of such reallocation. This is because, output of a region directly depends on the fraction of federal funds spent in that region, and indirectly on output of the other region. Thus even if the proportion of government funds increases for a region, its output may actually decline if the fall in the fraction of government resources for the other region signi®cantly decreases production there. Our results demonstrate that in addition to the amount of government expenditures and public services, an economy's capital accumulation, production, and factor returns are signi®cantly in¯uenced by how these government expenditures and public services are regionally allocated.

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The Effect of Monetary and Fiscal Policies on Regional Business Cycles

Cited by 35 publications

References 14 publications

Regional Effects of Monetary Policy in China: Evidence From China's Provinces

Regional Effects of Monetary Policy in China: Evidence From China's Provinces

Mode-Locking and Regional Business Cycle Synchronization*

National and regional repercussions of regional reallocations of federal expenditures and public services

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