In this paper we determine the extent to which information about the comparative importance of major sectors of a state's economy can improve the ability to forecast compound annual growth rates in personal income. We first calculate compound growth rates in disposable personal income per capita for the time period 1980 to 1988. We then investigate the extent to which heterogeneity exists in the economies of states that have traditionally been grouped into the same geographic region. The hypothesis is that many states' economies are unlike the economies of other states within a geographic region. We develop two different categorizations for states. The first categorization is solely based on the comparative economic importance of major sector. The second categorization is a modification of Census regions incorporating certain information about the type of economy.


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