Local and global shocks in Austria. A VAR application

We assume that fluctuations in regional contributions to gdp have two sources: (1) local shocks due to region specific disturbances and (2) global shocks due to nationwide disturbances. the two unobservable shocks are identified in a recursive var model for each region and several indicators for their relative importance are estimated with austrian yearly data from 1961 to 1988. the estimated ratio of variances of global to total shocks varies from 27.7 percent (salzburg) to 67.9 percent (vorarlberg) .;