COINTEGRATION OF REGIONAL GSP WITH NATIONAL GDP

Gross state product for the eight BEA regions are tested for stationarity and for cointegration with national gross domestic product. All eight regional GSP and GDP are characterized by a random walk. None of the eight regional GSP are cointegrated with GDP. Between the regions, the results are mixed, however we conclude that there is no cointegration between any of the regions. The results imply that there is no equilibrating mechanism that keeps the regions from drifting apart from each other or from national GDP.