The holy grail of the study of business cycles is identifying the source of economic fluctuations that affect an economic region. For anyone participating in the quest there are three paths. First, shocks might be region-specific, affecting only one region of a broader economy. An obvious...

This paper develops a statistical model to study the business cycles of the eight U.S. BEA regions. By combining unobserved component and VAR techniques I identify not only common and idiosyncratic sources of innovation, but also common and idiosyncratic responses to common shocks. Using this...