The Geography of the Great Recession
This paper documents, using county level data, some geographical features of the US business cycle over the past 30 years, with particular focus on the Great Recession. It shows that county level unemployment rates are spatially dispersed and spatially correlated, and documents how these characteristics evolve during recessions. It then shows that some of these features of county data can be generated by a model which includes simple channels of transmission of economic conditions from a county to its neighbors. The model suggests that these local channels are quantitatively important for the amplification/muting of aggregate shocks.
We thank our discussants, Jonas Fisher, Karen Helene Ulltveit-Moe, the editors Francesco Giavazzi and Ken West, as well as participants to the 2012 ISOM conference in Oslo for excellent comments and suggestions. We also thank David Van Riper and Mike Mommsen for valuable help with geographical data. Finally thanks to Zillow research for giving us access to their data-set of county level housing prices. All remaining errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Alessandra Fogli & Enoch Hill & Fabrizio Perri, 2013. "The Geography of the Great Recession," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 305 - 331.