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MEASURES OF DIVERSIFICATION: PREDICTORS OF REGIONAL ECONOMIC INSTABILITY *
Author(s) -
Brewery H. L.
Publication year - 1985
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1985.tb00314.x
Subject(s) - heteroscedasticity , diversification (marketing strategy) , explanatory power , portfolio , economics , econometrics , instability , financial economics , business , philosophy , physics , epistemology , marketing , mechanics
This work focuses on determining which measure of regional economic diversification best explains differences in economic instability across regions. One recent article found that a portfolio variance measure had the highest explanatory power. Another researcher found that an entropy measure was best after the model was corrected for heteroscedasticity. Results presented here indicate that, after correction for heteroscedasticity, portfolio variance once again displays the greatest power to explain cross‐sectional variation in observed regional instability.