Aggregate and regional disaggregate fluctuations

This paper models uctuations in regional disaggregates as a nonsta- tionary, dynamically evolving distribution. Doing so enables study of the dynamics of aggregate uctuations jointly with those of the rich cross-section of regional disaggregates. For the US, the leading state| regardless of which it happens to be|contains strong predictive power for aggregate uctuations. This eect is dicult to understand if only ag- gregate disturbances aect aggregate business cycles through aggregate propagation mechanisms. Instead, a better picture might be one of a \wave" of regional dynamics, rippling across the national economy.