Factors influencing the space-time lags of regional economic adjustment

Studies of the relationship between national and regional fluctuations have often found evidence of consistent space-time lags in regional economic adjustment. Some researchers have argued that depressed and peripheral regions take longer to adjust to national fluctuations than more central and prosperous regions. In this paper, a series of hypotheses are suggested to account for variations in space-time economic adjustments at the local level. The spatial and temporal transmission of market outcomes, uncertainty and the role of money are shown to be particularly important determinants of adjustment regardless of industrial location patterns. Emphasis is placed on inventory adjustments and unanticipated changes in sales by firms operating under conditions of imperfect competition. Following Hicks, the model is dependent upon fix-price quantity adjustment assumptions and is primarily short-run oriented.