| In several economic and social science studies the national economy has been treated as a whole indivisible unit. The field of regional economics has recognized for several years that regional economies at the census, state, and sub-state level have differences in industrial mix, growth rates, and responses to exogenous events. Three regional economic questions will be analyzed. First, do the changes in monetary policy have an influence on the state economies? Second, does real income per capita accounting for cost of living differences converge? Third, is there a linkage between the state's responsiveness to monetary policy and real state income per capita convergence? The analysis begins with an update of Mishkin's 1982 national study on the impacts of anticipated and unanticipated money on output. From there the analysis expands to a similar analysis for each state to evaluate the responsiveness of the state's economy to anticipated and unanticipated money. Finally, simulations will be performed to see the impact of these money terms on convergence. The findings of the analysis indicates that unanticipated money matters more than anticipated money at the national and state level, that state income per capita does not converge, and that there is a linkage between both types of money and the direction of convergence of state income per capita. |
