Partial Adjustment Analysis of Income and Jobs, and Growth Regimes in the Appalachian Region with Smooth Transition Spatial Process Models

In this application, income and job growth in the eastern United States are explained using a partial adjustmentmodel with regime switching potential and spatial spillover, or ‘‘Smooth Transition’ ’ spatial process models (STAR). This relatively new class of spatial regression models provides a parametric approach to testing hypotheses about the influence external economies have on ‘‘core-periphery’ ’ structures characterizing the Dixit-Stilgitz-Krugman typemodels describing regional economies.Growth is endogen-ized as a locally contagious process and specific to regimes,which are also endogenousl