Differences in household income per head over the UK trade cycle; a comment

Abstract

In a recent short paper Dewhurst (1998) demonstrated that, from 1984–93, there was convergence in GB regional and household incomes per head during slumps and divergence during booms. This paper suggests that these findings are the result of two main influences. The first is the fact that the cycle is damped in more peripheral and lower mean household income per head areas and the second that there is a time in the cycle lag between an upturn or downturn in Greater London / the rest of the South East and the same effect in more distant locations. Various suggestions are put forward for these results. There is also discussion of the usefulness of these results for forecasting purposes.