nep-geo New Economics Papers
on Economic Geography
Issue of 2005‒08‒13
twenty-two papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial, Cultural, and Ecological Autocorrelation in U.S. Regional Data By E. Anthon Eff
  2. Culture and Institutions: Economic Development in the Regions of Europe By Guido Tabellini
  3. Heterogeneity within Communities: A Stochastic Model with Tenure Choice By François Ortalo-Magné; Sven Rady
  4. Persistence in inequalities across the Spanish regions By Jesús Rodríguez; Diego Romero de Ávila; Diego Martínez-López
  5. Factor Price Equality and the Economies of the United States By Bernard, Andrew; Redding, Stephen; Schott, Peter
  6. "Romes without Empires": Primate Cities, Political Competition, and Economic Growth By Cem Karayalcin
  7. Interregional Redistribution and Budget Institutions under Asymmetric Information By Bernd Huber; Marco Runkel
  8. Spatial Dependence, Housing Submarkets, and House Prices By Steven C. Bourassa; Eva Cantoni; Martin Hoesli
  9. Photogrammetric Mapping By Deepak Kumar
  10. Patent Citations and the Geography of Knowledge Spillovers: A Reassessment By Peter Thompson; Melanie Fox Kean
  11. Patent Citations and the Geography of Knowledge Spillovers: Evidence from Inventor- and Examiner-Added Citations By Peter Thompson
  12. Economic Recovery and Growth in Middle Tennessee By David A. Penn
  13. The determinants of migration in Brazil By André Braz Golgher; Carlos Henrique Rosa; Ari Francisco de Araújo Junior
  14. When Winning is the Only Thing: Pure Strategy Nash Equilibria in a Three-Candidate Spatial Voting Model By Richard A. Chisik; Robert J. Lemke
  15. Housing Price Dispersion: An Empirical Investigation By Charles Ka-Yui Leung; Youngman Chun Fai Leong; Siu Kei Wong
  16. Political Business Cycles in Local Employment By Cesar Alberto Campos Coelho; Francisco José Veiga; Linda Gonçalves Veiga
  17. Separate When Equal? Racial Inequality and Residential Segregation By Patrick Bayer; Hanming Fang; Robert McMillan
  18. Does Labour Market Risk Increase the Size of the Public Sector? Evidence from Swedish Municipalities By Vlachos, Jonas
  19. Getting the Most Out of Public Sector Decentralisation in Japan By Isabelle Joumard; Tadashi Yokoyama
  20. Comparatif des finances cantonales et communales / Comparison of Cantonal and Municipal Finances By Nils Soguel; Simon Iogna-Prat; Toni Beutler
  21. Can Risk Averse Private Entrepreneurs Efficiently Produce Low Income Housing? By Paul MAKDISSI; Quentin WODON
  22. Determinants of Self-Reported Financial Security for Oklahoma County Households – An Application of Multiple Imputation By David A. Penn

  1. By: E. Anthon Eff
    Abstract: Positive autocorrelation implies that proximate observations take on similar values. “Proximate” can be defined in many different dimensions. In a cross-section of U.S. regions, it can be defined using physical distance, cultural similarity, ecological similarity, or using frequency and intensity of interaction, such as migration or commuting relationships. Autocorrelation of regression residuals presents well-known problems in least-squares estimation, but autocorrelation also provides useful information for exploratory data analysis and model specification. The paper shows that autocorrelation is widespread in U.S. regional data.
    Keywords: Spatial Autocorrelation; Culture; Religion
    JEL: R15 C49 Z10 Z12
    Date: 2004–09
  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 self-determination. 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.
    Keywords: culture, economic development, trust, literacy, institutions
    JEL: F10 N13 O10 P10
    Date: 2005
  3. By: François Ortalo-Magné; Sven Rady
    Abstract: Standard explanations for the income heterogeneity within neighborhoods rely on differences of preferences across households and heterogeneity of the housing stock. We propose an alternative and complementary explanation. We construct a stochastic equilibrium sorting model where (1) income is the sole dimension of household heterogeneity, (2) households form state-contingent housing location plans that may involve moves over their lifetimes, (3) households choose whether to own or rent depending on the housing expenditure risk associated with each tenure mode, and (4) there is a probability that newcomer households move in and compete for homes with native households. Income mixing within neighborhood arises for two reasons. First, allowing natives to form state-contingent housing location plans breaks the indivisibility of housing consumption implicit in the literature where households choose their location once and for all. Second, natives can insure themselves against rent fluctuations by buying their home prior to the realization of the population shock; newcomers cannot. As a result, poorer natives stay in the more desirable communities and only richer newcomers move in these communities. Evidence from U.S. metropolitan areas supports the effects predicted by the model.
    JEL: D31 R12 R21
    Date: 2005
  4. By: Jesús Rodríguez (Universidad Pablo de Olavide); Diego Romero de Ávila (Universidad Pablo de Olavide); Diego Martínez-López (Centro de Estudios Andaluces y Univesidad Pablo de Olavide)
    Abstract: In this paper we investigate several issues concerning persistence in inequalities of relative income per capita among the Spanish regions over 1980-2002. For that purpose we take a Bayesian approach which extends the work by Canova and Marcet (1995). Firstly, we study to what extent there exists a fixed effect bias in the standard cross-section estimates, and we find that the speed of convergence is indeed underestimated. Secondly, we provide a battery of results in which steady states and convergence rates have been obtained for a continuum of prior distributions. Finally, we also deal with persistence in inequalites by determining whether initial conditions matter in the distribution of regional steady states, and our conclusion is that regional disparities tend to persist over time in Spain.
    Keywords: Convergence, Inequalities, Bayesian Econometrics, Gibbs sampling
    JEL: C11 O47 R11
    Date: 2005
  5. By: Bernard, Andrew; Redding, Stephen; Schott, Peter
    Abstract: We develop a methodology for identifying departures from relative factor price equality across regions that is valid under general assumptions about production, markets and factors. Application of this methodology to the United States reveals substantial and increasing deviations in relative skilled wages across labour markets in both 1972 and 1992. These deviations vary systematically with labour markets’ industry structure both in cross section and over time.
    Keywords: factor price equality; labour market areas; neoclassical trade theory; regional wages
    JEL: C14 F16 J30 R23
    Date: 2005–06
  6. By: Cem Karayalcin (Department of Economics, Florida International University)
    Abstract: Many developing economies are characterized by the dominance of a super metropolis. The coexistence of a primate city with a low level of economic development is not an accident, the former being symptomatic of the causes of the latter. Taking historical Rome as the archetype of a city that centralizes political power to extract resources from the rest of the country, we develop two models of rent-seeking and expropriation which illustrate different mechanisms that relate political competition to economic outcomes. The "voice" model shows that rent-seeking by di?erent interest groups (localized in different specialized cities/regions) will lead to low investment and growth when the number of these groups is low. Increased political competition in the form of more organized groups engaged in countervailing activity leads to more secure property rights and higher growth. The "exit" model allows political competition among those with political power (to tax or expropriate from citizens) over a footloose tax base. It shows that when this power is centralized, tax rates would be higher and growth rates lower. When political power is decentralized across different self-interested rulers in diverse jurisdictions, the competition over the mobile resources leads to lower tax/expropriation rates, raising the long-run rate of growth of the economy.
    Keywords: public goods, inequality, redistribution, political economy
    JEL: O4 P5
    Date: 2005–07
  7. By: Bernd Huber; Marco Runkel
    Abstract: Empirical evidence from the U.S. and the European Union suggests that regions which contribute to interregional redistribution face weaker borrowing constraints than regions which benefit from interregional redistribution. This paper presents an argument in favor of such differentiated budgetary institutions. It develops a two-period model of a federation consisting of two types of regions. The federal government redistributes from one type of regions (contributors) to the other type (recipients). It is shown that a fiscal constitution with lax budget rules for contributors and strict budget rules for recipients solves the self-selection problem the federal government faces in the presence of asymmetric information regarding exogenous characteristics of the regions.
    Keywords: asymmetric information, interregional redistribution, borrowing rules
    JEL: D82 H74 H77
    Date: 2005
  8. By: Steven C. Bourassa; Eva Cantoni; Martin Hoesli
    Abstract: This paper compares the impacts of alternative models of spatial dependence on the accuracy of house price predictions in a mass appraisal context. Explicit modeling of spatial dependence is characterized as a more fluid approach to defining housing submarkets. This approach allows the relevant “submarket” to vary from house to house and for transactions involving other dwellings in each submarket to have varying impacts depending on distance. We compare the predictive ability of different specifications of both geostatistical and lattice models as well as a simpler model based on submarkets with fixed boundaries. We conclude that – for our data – no spatial statistics method does as well in terms of predictive ability as a simple OLS model that includes a series of dummy variables defining submarkets. However, of the spatial statistics methods, geostatistical models provide more accurate predictions than lattice models. We argue that this is due to the fact that the kriging procedure used to make predictions in a geostatistical framework directly incorporates spatial information about nearby properties. That is not possible in a lattice framework due to the reliance on a matrix of weights that incorporates relationships only for the sample of properties that transact.
    Keywords: : spatial dependence; hedonic price models; geostatistical models; lattice models; mass appraisal; housing submarkets
    JEL: C21 R31
    Date: 2005–06
  9. By: Deepak Kumar (ICFAI University Press , Hyderabad,India)
    Abstract: Photogrammetric Mapping (or Photometry) is an art and science of making measurements in three dimensions. Photometry has been used since the World War II and now it is an important aspect in urban infrastructure.
    Keywords: Photogrammetric Mapping ,Urban Infrastructure
    JEL: R
    Date: 2005–08–05
  10. By: Peter Thompson (Department of Economics, Florida International University); Melanie Fox Kean (Department of Economics, University of Houston)
    Abstract: Jaffe, Trajtenberg and Henderson (Quarterly Journal of Economics, 108(3):577-98, 1993) developed a matching method to study the geography of knowledge spillovers using patent citations, and found that knowledge spillovers are strongly localized. Their method matches each citing patent to a non-citing patent intended to control for the pre-existing geographic concentration of production. We show how the method of selecting the control group may induce spurious evidence of localized spillovers. This paper reassesses their findings using control patents selected under different criteria. Doing so eliminates evidence of strong intranational localization effects at the state and metropolitan levels, but leaves largely unaffected evidence of international localization effects.
    Keywords: patent citations, knowledge spillovers, geography
    JEL: O31 O34
    Date: 2004–01
  11. By: Peter Thompson (Department of Economics, Florida International University)
    Abstract: I report new evidence for localized knowledge spillovers identified by within-patent variations in the geographic matching rates of citations added by inventors and citations added by examiners. Evaluated at the mean citation lag, inventor citations are 20 percent more likely than examiner citations to match the country of origin of their citing patent, while US inventor citations are 25 percent more likely to match the state or metropolitan area of their citing patent. The localization of intranational knowledge spillovers declines with the passage of time, but international borders present a persistent barrier to spillovers.
    Keywords: Voting, patent citations, knowledge spillovers, geography
    JEL: O31 O34
    Date: 2004–03
  12. By: David A. Penn
    Abstract: Middle Tennessee is growing rapidly: two Midstate counties rank among the top 100 counties nationally for population growth, and Rutherford County ranks at the top nationally among other large counties for payroll employment growth. Middle Tennessee is growing, but what are the implications for long-term economic development, especially the demand for public services? This study reviews the performance of the Middle Tennessee economy since the recent recession and examines the implications of rapid growth for the demand for public services.
    Keywords: Tennessee; Regional Economics
    JEL: R1
    Date: 2005–07
  13. By: André Braz Golgher (Cedeplar-UFMG); Carlos Henrique Rosa (Cedeplar-UFMG); Ari Francisco de Araújo Junior (Ibmec-MG)
    Abstract: In the present study, the neoclassic human capital model was used as the theoretical foundation for the analyses of the determinants of migration in Brazil. The empirical studies were carried on with the application of a multiple regression macro model based on the gravitational model and on the Poisson distribution. In the empirical model, the number of migrants between Brazilian mesoregions was the response variable. Many socioeconomic and criminal aspects of the origin and the destiny of the migrants were used as explanatory variables. The distance between these regions and many geographical dummies were also used as independent variables. This paper contains seven sections. The first one introduces some concepts that are related to the determinants of migration. The next section briefly shows some aspects of the Brazilian regional diversity. After this, some quantitative data about the process of migration is presented. The subsequent section discusses the theoretical models of the analysis, which is the human capital model, and presents some similar studies done by other authors. Then, is showed the methodology and the macro model of migration that were used in the empirical analysis. Finally, the main empirical results are shown and the final discussions and conclusions are presented.
    JEL: R23 J11 J60
    Date: 2005–06
  14. By: Richard A. Chisik (Department of Economics, Florida International University); Robert J. Lemke (Department of Economics and Business, Lake Forest College)
    Abstract: It is well-known that there are no pure strategy Nash equilibria (PSNE) in the standard three-candidate spatial voting model when candidates maximize their share of the vote. When all that matters to the candidates is winning the election, however, we show that PSNE do exist. We provide a complete characterization of such equilibria and then extend our results to elections with an arbitrary number of candidates. Finally, when two candidates face the potential entrant of a third, we show that PSNE no longer exist, however, they do exist when the number of existing candidates is at least three.
    Keywords: Voting, spatial equilibrium, location models, entry
    JEL: C7 D0 H8 R1
    Date: 2004–04
  15. By: Charles Ka-Yui Leung; Youngman Chun Fai Leong; Siu Kei Wong
    Keywords: price dispersion, search models, macroeconomic factor, time aggregation
    JEL: C32 D61 D83 E30 R31
    Date: 2005–07
  16. By: Cesar Alberto Campos Coelho; Francisco José Veiga (Universidade do Minho - NIPE); Linda Gonçalves Veiga (Universidade do Minho - NIPE)
    Abstract: Using employment data for municipalities, we find strong evidence of political business cycles. Employment increases shortly before elections mainly in municipalities where the mayor´s party has a majority of deputies in the municipal assembly and where she is running for reelection. Classification-JEL: D72, H7.
    Keywords: Political business cycles, local governments, employment, Portugal.
    Date: 2005
  17. By: Patrick Bayer; Hanming Fang; Robert McMillan
    Abstract: In contrast to conventional wisdom, this paper identifies a powerful mechanism which can lead to persistent and even increasing residential segregation when racial differences in education and other sociodemographics narrow. We document that middle-class black neighborhoods are in short supply in many U.S. metropolitan areas, forcing highly educated blacks either to live in white neighborhoods with high amenity levels or in more black neighborhoods with lower amenity levels. A simple model then shows that increases in the proportion of highly educated blacks in a metropolitan area may lead to the emergence of new middle-class black neighborhoods, relieving the prior neighborhood supply constraint and causing increases in residential segregation. Cross- MSA evidence from the 2000 Census indicates that this mechanism does in fact operate: as the proportion of highly educated blacks in an MSA increases, so the segregation of educated blacks and blacks more generally goes up. Our empirical findings are robust and have important implications for the evolution of residential segregation.
    JEL: H0 J7 R0 R2
    Date: 2005–08
  18. By: Vlachos, Jonas
    Abstract: It has been argued that the public sector is an insurance against otherwise uninsurable risks. If that is the case, it is reasonable to expect the public sector to be larger in regions where the private labour-market is risky. Using data from Swedish municipalities, this paper reports that labour-market risk has a substantial impact on public employment. The results for aggregate spending and taxation are, however, much weaker and labor-market risk thus affects the labour intensity of the municipal public sector.
    Keywords: labour market risk; panel data; public employment; public sector size
    JEL: C23 H11 H40 J45
    Date: 2005–06
  19. By: Isabelle Joumard; Tadashi Yokoyama
    Abstract: <P>Revamping fiscal relations across levels of government is of paramount importance in supporting fiscal consolidation and public sector effectiveness. This paper analyses a number of problems, including regulations that limit local governments’ ability to innovate and respond to local citizens’ preferences, the inefficient system of intergovernmental grants, the complex structure of local taxes and fiscal rules which are too lenient to secure fiscal discipline. The paper concludes that the grant system should be reformed to promote local governments’ incentives to introduce innovations so as to better respond to needs at lower cost. Barriers to the effective use of sub-national governments’ taxing powers should be removed while efforts should be made to keep the tax system as simple and neutral as possible. Existing fiscal rules and market instruments should be hardened. This would require that the central government state clearly that it will not intervene as a lender of last ...</P> <P>Optimiser l’impact de la décentralisation au Japon <P>La réforme des relations financières entre l’État et les collectivités territoriales est essentielle pour soutenir le processus d’assainissement budgétaire et l’efficacité du secteur public. Ce document met en lumière un certain nombre de problèmes, notamment les réglementations qui limitent la capacité des collectivités territoriales à innover et à répondre aux préférences des citoyens, un système inefficace de transferts intergouvernementaux, une fiscalité locale excessivement complexe et des règles budgétaires trop laxistes. Ce document conclut qu’une réforme du système des transferts est nécessaire pour inciter les collectivités territoriales à innover afin de répondre mieux et à moindre coût aux besoins des citoyens. Les dispositions institutionnelles qui limitent l’utilisation effective des pouvoirs des collectivités territoriales en matière d’impôts doivent être éliminées tout en s’assurant que le système fiscal soit le plus simple et le plus neutre possible. Les règles ...</P>
    Keywords: Japan, Japon, local government, fiscal discipline, discipline budgétaire, fiscal federalism, intergovernmental grants, fédéralisme financier, collectivités territoriales, transferts intergouvernementaux
    JEL: H1 H2 H7 R58
    Date: 2005–01–27
  20. By: Nils Soguel (Swiss School of Public Administration-IDHEAP); Simon Iogna-Prat (Swiss School of Public Administration-IDHEAP); Toni Beutler (Swiss School of Public Administration-IDHEAP)
    Abstract: The IDHEAP has published its Comparison of Cantonal and Municipal Finances every year since 1999. The aim is to shed light on the fiscal condition of the Swiss public authorities. The comparison covers all institutional levels: the Confederation, the 26 cantons and a dozen cantonal capitals which rank among Switzerland's largest cities. The comparison is based on eight indicators. The result for each indicator is graded between 6 (excellent) and 1 (poor). This makes it possible to merge the indicators while weighting them on the basis of their significance. Thus, it is possible to judge the financial health of the canton, on the one hand, and the quality of its financial management, on the other hand, and, finally, to summarize its overall situation. To compare the situation of your local public authority visit the IDHEAP website.
    JEL: D6 D7 H
    Date: 2005–07–27
  21. By: Paul MAKDISSI (Département d’´economique and CEREF, Universit´e de Sherbrooke, 2550 boulevard de l’Universit´e, Sherbrooke, Qu´ebec, Canada, J1K 2R1); Quentin WODON (LCSPR, World Bank, 1818 H Street, NW, Washington, DC 20433, USA)
    Abstract: Under rent ceilings and quality doors for low income housing units, imperfect information on the ability of tenants to pay their rent may lead the decentralized production of housing units by risk averse private entrepreneurs to be inefficient. A coordinating agency and/or subsidies for new tenants would help to produce more housing, thereby increasing the profits for landlords while also enabling more low income households to find housing.
    Keywords: Low Income Housing, Risk Aversion, Rent Control, Public Good
    JEL: H41 R31
    Date: 2004
  22. By: David A. Penn
    Abstract: Economists are giving more attention to the issue of subjective well-being. A recent study of households in West Virginia treats subjective well-being in a quality of life context (Bukenya 2003) in rural areas. Wolfers (2003) examines business cycle volatility and subjective well-being, while McBride (2001) models relative-income effects on subjective well-being. A recent study (Praag 2002) considers financial situation as a domain of well-being, along with health, employment, leisure, housing, and environment. This study examines the factors that determine financial well-being for households in Oklahoma County, Oklahoma. The study is motivated by the availability of extensive household-level data for a six year period for Oklahoma County.
    Keywords: Missing Data; Oklahoma; Multiple Imputation
    JEL: C15 R1
    Date: 2005–07

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