Is Capital Expenditure Contagious? An Analysis of UCC Data from Ohio and Its Neighbors

ECONOMIC CONDITIONS ARE OFTEN OBSERVED TO BE CORRELATED ACROSS SPACE AND TIME. ONE INTERPRETATION OF THIS PHENOMENON IS THAT ECONOMIC ACTIVITY IS “CONTAGIOUS.” THAT IS, GOOD OR BAD CONDITIONS IN ONE ECONOMIC AREA MAY LATER CAUSE SIMILAR CONDITIONS TO OCCUR IN NEARBY AREAS. THE PREVALENCE AND EXTENT OF THESE RELATIONSHIPS IS IMPORTANT TO UNDERSTAND FOR THOSE SEEKING TO FOSTER REGIONAL ECONOMIC DEVELOPMENT. WE FOCUS ON CAPITAL EQUIPMENT SPENDING AT THE STATE LEVEL AT A MONTHLY FREQUENCY. THIS IS POSSIBLE GIVEN OUR ACCESS TO A UNIQUE DATA SET, THE RANDALL-REILLEY CAPITAL INVESTMENT INDEX (RRCII). THIS INDEX MEASURES CAPITAL EXPENDITURE USING UNIFORM COMMERCIAL CODE (UCC) FORMS FILED EACH MONTH WITH EACH STATE’S SECRETARY OF STATE. THE DATA IS CLASSIFIED INTO THREE INDUSTRIES: AGRICULTURE, CONSTRUCTION, AND MACHINE TOOLS, AS WELL AS A COMPOSITE MEASURE. IN THIS STUDY, WE UTILIZE THE INDEX’S STATE-LEVEL DATA FOR OHIO AND ITS NEIGHBORS: MICHIGAN, INDIANA, KENTUCKY, WEST VIRGINIA, AND PENNSYLVANIA. OUR METHODOLOGY CONSISTS OF TYPICAL TIME SERIES TECHNIQUES: GRANGER CAUSALITY TESTS, VECTOR AUTOREGRESSIONS, AND THEIR ASSOCIATED IMPULSE RESPONSE FUNCTIONS. OUR INITIAL RESULTS SUGGEST THAT MICHIGAN IS THE ONLY STATE WITH A SIGNIFICANT RELATIONSHIP WITH OHIO AT THE COMPOSITE LEVEL, BUT THAT PENNSYLVANIA AND WEST VIRGINIA SHOW SOME RELATIONSHIP WITH OHIO IN CONSTRUCTION, AS DOES INDIANA WITH MACHINE TOOLS

An Empirical Analysis of the Housing Decisions of Older Homeowners

This paper examines the effects of finanacial, demographic and housing variables on older homeowners' propensity to make a variety of housing changes. Pooled cross-sectional data from the Panel Study of Income Dynamics is used in a multinomial logit framework. The results indicate that demographic factors are much more important than financial factors in explaining housing changes by older homeowners. Copyright American Real Estate and Urban Economics Association.