Business Cycle Phases in U.S. States

Abstract

The U.S. aggregate business cycle is often characterized as a series of distinct recession and expansion phases. We apply a regime-switching model to state-level coincident indexes and conclude that state business cycles also can be characterized in this way. We find also that states differ a great deal in the levels of growth that they experience within each phase and that they do not necessarily experience the phases in tandem. Further, there are significant differences between states in the extent to which their business cycle phases are in sync with those of the aggregate economy.