nep-geo New Economics Papers
on Economic Geography
Issue of 2005‒06‒19
four papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Europe Without Borders? The Effect of the EMU on Relative Prices By Hisham Foad
  2. Culture and Institutions: economic development in the regions of Europe By Guido Tabellini
  3. ¿Cuánto cuesta vivir en las principales ciudades colombianas? Índice de Costo de Vida Comparativo By Julio Romero

  1. By: Hisham Foad
    Abstract: Has the formation of the European Monetary Union reduced the impact of national borders on cross-border market convergence? This paper extends Engel and Rogers (1996) well known work on border effects to cities across Western Europe over the period 1995 . 2002 and finds two key results. First, cross-border relative prices tend to be more volatile than prices between locations not separated by a border. This result is robust to a variety of potential explanations for border effects, such as uneven sampling bias, idiosyncratic price shocks, and incomplete exchange rate-pass through. Turning our attention to cross-border price volatility before and after the formation of the EMU, the effects vary by country size. Within the EMU, cross-border price volatility has not changed between the "small" countries, but has fallen significantly between the large EMU countries. Between the EMU and the UK, cross-border volatility has increased between the UK and the small EMU countries, but there has been no significant change between the UK and the large EMU countries. These results are consistent with the fact that exchange rates are more likely to adjust to price differentials between small countries than between large countries.
    Date: 2005–04
  2. By: Guido Tabellini
    Abstract: Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual selfdetermination. To isolate the exogenous variation in culture, I rely on two historical variables used as instruments: the literacy rate at the end of the XIXth century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850 and national effects. Moreover, the data do not reject the over-identifying assumption that the two historical variables used as instruments only influence regional development through culture. The indicators of culture used in this paper are also strongly correlated with economic development and with available measures of institutions in a cross-country setting.
  3. By: Julio Romero
    Abstract: Actualmente no se cuenta con una medición de las disparidades regionales en el costo de vida para Colombia. En este trabajo se calcula un índice de costo de vida comparativo. Se trata de un deflactor regional que puede ser utilizado para comparar otras variables asociadas a la demanda, tales como el ingreso laboral. Para expresar las diferencias regionales en el costo de vida se propone la construcción de un indicador que compara el gasto mínimo de cada ciudad con el escenario alternativo, es decir, que este mismo plan sea evaluado en la situación de precios de las demás ciudades. Como resultado de este trabajo se evidencia la existencia de importantes diferencias regionales en el costo de vida de los hogares colombianos; estas son, en promedio, del 26% entre la ciudad de mayor y menor costo de vida comparativo.
    Keywords: Economía regional,
    JEL: R10
    Date: 2005–06–30
  4. By: Fabrizio Carmignani (United Nations Economic Commission for Europe)
    Abstract: This paper investigates the extent of per-capita income convergence in regional integration initiatives. Panel unit root testing is performed on 28 regional groupings. There is evidence of convergence in South- South integration, but this might be taking place to the bottom.
    Keywords: Regional integration, Income convergence, Heterogeneous dynamic panels.
    JEL: F15 O40 C12 C23
    Date: 2005–06–14

This nep-geo issue is ©2005 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.