A STRUCTURAL DECOMPOSITION OF REGIONAL ECONOMIC-INSTABILITY - A CONCEPTUAL-FRAMEWORK

Many rural regions are characterized by unstable economies. Studies th at investigate economic instability in these regions, however, tend to examine the effects rather than causes of its occurrence. Efforts to diminish instability can only be successful if they address its source s. Using an input-output model, a conceptual decomposition of the vari ance of gross output is used as a means of identifying supply and dema nd sources of instability. This framework can be used for empirical in vestigations into the causes of economic instability, and for the desi gn of stabilization policies. Data limitations, however, may preclude some applications of the technique.