An alternative definition of economic regions in the U.S. based on similarities in state business cycles

Since the 1950s the Bureau of Economic analysis (BEA) has grouped the states into eight regions based primarily on cross-sectional similarities in their socioeconomic characteristics. This is the most frequently used grouping of states in the U.S. for economic analysis. Since several recent studies concentrate on similarities and differences in regional business cycles, this paper groups states into regions based not on a broad set of socioeconomic characteristics but on the similarities in their business cycles. The analysis makes use of a consistent set of coincident indexes estimated from a Stock and Watson-type model. The author applies k-means cluster analysis to the cyclical components of these indexes to group the 48 contiguous states into eight regions with similar cycles. Having grouped the states into regions, the author determines the relative strength of cohesion among the states in the various regions. Finally, the author compares the regions defined in this paper with the BEA regions.Business cycles ; Regional economics

House prices and the quality of public schools: what are we buying?

Do house prices reflect the quality of the local public schools? To what extent do school district policies determine how well students perform? How do such factors as neighborhood, family, and peers affect school quality and house prices? Ted Crone examines these questions, and others, to determine whether house prices do, indeed, include a school premium.Education ; Housing

Where have all the factory jobs gone - and why?

Over the past 30 years, the three states of the Third Federal Reserve District have lost more than one-third of their manufacturing jobs. And that job loss has accelerated over the past 15 years. Despite this, the region's manufacturing output has expanded over the same period, although much more slowly than the nation's. Why has the region's manufacturing sector lagged behind? In this article, Ted Crone looks at shifts in markets and differences in costs as possible culprits.Employment (Economic theory) ; Federal Reserve District, 3rd ; Manufactures

The changing faces of the Third District: a snapshot of the region from the 2000 census.

In "The Changing Faces of the Third District: A Snapshot of the Region from the 2000 Census," Ted Crone describes some of these patterns and tells us what they mean for economic growth in this region.Federal Reserve District, 3rd ; Population

The long and the short of it: recent trends and cycles in the Third District states

Most discussions of business cycles focus on the national economy. But regional cycles are also important, and they can vary significantly from one region to another. Analysis of regional cycles can help businesses plan investments and project sales, among other things. A look at the economies of the Third District states - Pennsylvania, New Jersey, and Delaware -illustrates how trends and cycles can differ even among neighboring states. In "The Long and the Short of It: Recent Trends and Cycles in the Third District States," Ted Crone traces the historical patterns of the three states' economies but warns that noting such patterns is not a substitute for detailed current analysis.Business cycles

A new look at economic indexes for the states in the Third District

If we want to know how things are going in the economy, which measures should we look at? Unemployment? GDP? Or something else? One solution is to combine several measures into a composite index of current or future economic activity. Several years ago, the Philadelphia Fed did just that for the states in the Third District. Now, a number of factors suggest that revisions of those indexes are in order. This article explains what those revisions entail and why the new indexes are better than the old ones.Federal Reserve District, 3rd

Using state indexes to define economic regions in the U.S.

When regional economists study the interaction of multi-state regions in the U.S., they typically use the regional divisions developed by the U.S. Bureau of the Census or the Bureau of Economic Analysis (BEA). The current census divisions were adopted in 1910 and divide the states into nine regional groups for the presentation of data. Since the 1950s, the BEA has grouped the states into eight regions based primarily on cross-sectional similarities in their socioeconomic characteristics. The BEA definition of regions is perhaps the most frequently used grouping of states for economic analysis. ; Since many economic studies of regions concentrate on similarities and differences in regional business cycles, it seems appropriate to group states into regions based on some common cyclical behavior. This paper explores the possibility of grouping states into regions based on common movements in state indexes of economic activity. These state indexes are variants of the coincident index developed by James Stock and Mark Watson for the U.S. economy. ; The author has applied cluster analysis to the monthly changes in these economic activity indexes to group the states into regions with similar business cycles. He has identified six distinct regions consisting of contiguous states with similar monthly changes in their economic activity indexes.Regional economics

What test scores can and cannot tell us about the quality of our schools.

"What Test Scores Can and Cannot Tell Us about the Quality of Our Schools," by Ted Crone, recognizes that how to best judge the quality of our schools is a thorny issue. The No Child Left Behind Act, which was signed into law in January 2002, mandates standardized testing in math and reading for students in grades three through eight. The test scores will then be used both to gauge the students' level of proficiency in these subjects and to evaluate the schools' performance. But emphasizing test scores as a measurement of the quality of schools raises several questions. Crone looks at some of these questions and warns us to be cautious in how we use test scores.Education

Capitalization of the quality of local public schools: what do home buyers value?

The expansion of state-mandated tests in the 1990s and the testing requirements of the No Child Left Behind Act have supplied researchers with an abundance of data on test scores that can be used as measures of school quality. This paper uses the state-mandated test scores for 5th grade and 11th grade in Montgomery County, Pennsylvania, to examine three issues about the capitalization of school quality into house prices: (1) At what level do prospective home buyers evaluate the quality of local public education—at the district level or the level of the neighborhood school? (2) After accounting for student achievement as reflected in test scores, are other aspects of the local public school system, such as class size or expenditures, capitalized into the value of a house? (3) Are the positive results we get for the capitalization of school quality into house prices due simply to the correlation between high test scores and other desirable neighborhood characteristics? The results of our investigation suggest that to home buyers some test-score averages are significantly better indicators of the quality of the local public school system than others. In particular, home buyers seem to evaluate the quality of public education at the district level rather than at the level of the local school. Class size at the high-school level has some independent effect on house prices, but not class size at the elementary school level. And once we account for student achievement, expenditures per pupil have no further effect on house prices. Finally, restricting our sample to similar neighborhoods along school district boundaries confirms our earlier results for high school test scores but not for elementary school scores.Education ; School choice

Consistent economic indexes for the 50 states.

In the late 1980s James Stock and Mark Watson developed for the U.S. economy an alternative coincident index to the one now published by the Conference Board. They used the Kalman filter to estimate a latent dynamic factor for the national economy and designated the common factor as the coincident index. This paper uses the Stock/Watson methodology to estimate a consistent set of coincident indexes for the 50 states. These indexes provide researchers with a comprehensive monthly measure of economic activity that can be used to examine a number of state and regional issues.Indexation (Economics)