Explaining Regional Patterns

Abstract

One of our themes has been that aggregate empirical analysis — typified by much of the work in the last chapter — is often inappropriate in a world of increasing dispersion, both across households and across space. This view is easily testable with regional data since relatively long time series are available at this level. However we saw in Chapter 2 that, in the long run, “regional” trends have not been the same internationally. In the UK, regional prices have moved in a similar manner over time, but this is not true either for the US Census Divisions or the Australian states. Although this could arise simply because the spatial dimensions are not directly comparable, this is probably not the only reason. It appears to be the case that there is no necessary reason why prices should converge across space.