"Using a regional VAR, we find large differences in the effects of monetary policyshocks across regions of the United States. We also find that the region-level effects ofmonetary policy differ a great deal between the pre-Volcker and Volcker-Greenspan periods interms of their depth and length. The two sample periods also yield very different rankings of theregions in terms of the effects of monetary policy. Our regional VAR also suggests thataggregate VARs that ignore regional variations can suffer from severe aggregation bias. We usethe results of our regional VAR to find evidence that recession depth related to the bankingconcentration and that the total cost of recession is related to the industry mix. Finally, wedemonstrate that the differences between the two sample periods are due to changes in themechanism by which monetary policy shocks are propagated"--Federal Reserve Bank of St. Louis web site.