NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Comovement in Cities

John Shea

NBER Working Paper No. 5304
Issued in October 1995
NBER Program(s):ME

Recent research has shown that industries that locate together in space also move together over the business cycle, and that this correspondence between spatial and temporal comovement is important to aggregate volatility. This paper asks whether this correspondence is due to local common shocks or to local spillovers. I examine interindustry comovements within seven large US cities, and find strong evidence for local spillovers. I estimate that local spillovers explain roughly one-third of manufacturing employment volatility at the city level. Local spillovers do not appear to result from transport costs and locally traded goods.

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Document Object Identifier (DOI): 10.3386/w5304

Published: Carnegie-Rochester Conference Series on Public Policy, vol.44, pp.169-206, June 1996 citation courtesy of

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