Regional economic instability is considered in the context of Australian rural regions. Beginning with an overview of case studies under-taken, a generalized framework is developed to make effective use of available regional input-output tables and incorporate a variety of dynamic reactions by firms to changes exogenous to the firms. A macroeconomic approach to a behavioral-based classification of firms is integrated with input-output impact analysis. It is suggested that diversity of behavior among firms might be a significant stabilizing element in regional economic management and that there is merit in further microlevel analysis of firms.