nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒07‒02
eight papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The Use of Spatial Filtering Techniques: The Spatial and Space-time Structure of German Unemployment Data By Roberto Patuelli; Daniel A. Griffith; Michael Tiefelsdorf; Peter Nijkamp
  2. Ségrégation résidentielle, accessibilité aux emplois et chômage : le cas de l'Ile-de-France By Laurent Gobillon; Harris Selod
  3. Employment Performance and Convergence in the European Countries and Regions By Cristiano Perugini; Marcello Signorelli
  4. How Are Canadian Regions Adjusting to a Larger and More Integrated North American Market? By Gu, Wulong; Sawchuk, Gary
  5. Strategic Urban Development under Uncertainty By Flavia Cortelezzi; Pierpaolo Giannoccolo
  6. Pay Inequality in Europe 1995-2000: Convergence Between Countries and Stability Inside By James Galbraith; Enrique Garcilazo
  7. Forecasting ECB Monetary Policy: Accuracy Is (Still) a Matter of Geography By Helge Berger; Michael Ehrmann; Marcel Fratzscher
  8. The owner-occupiers’ capital structure during a house price boom By Lunde, Jens

  1. By: Roberto Patuelli (Vrije Universiteit Amsterdam); Daniel A. Griffith (University of Texas at Dallas); Michael Tiefelsdorf (University of Texas at Dallas); Peter Nijkamp (Vrije Universiteit Amsterdam)
    Abstract: Socio-economic interrelationships among regions can be measured in terms of economic flows, migration, or physical geographically-based measures, such as distance or length of shared areal unit boundaries. In general, proximity and openness tend to favour a similar economic performance among adjacent regions. Therefore, proper forecasting of socio-economic variables, such as employment, requires an understanding of spatial (or spatio-temporal) autocorrelation effects associated with a particular geographic configuration of a system of regions. Several spatial econometric techniques have been developed in recent years to identify spatial interaction effects within a parametric framework. Alternatively, newly devised spatial filtering techniques aim to achieve this end as well through the use of a semi-parametric approach. Experiments presented in this paper deal with the analysis of and accounting for spatial autocorrelation by means of spatial filtering t! echniques for data pertaining to regional unemployment in Germany. The available data set comprises information about the share of unemployed workers in 439 German districts (the NUTS-III regional aggregation level). Results based upon an eigenvector spatial filter model formulation (that is, the use of orthogonal map pattern components), constructed for the 439 German districts, are presented, with an emphasis on their consistency over several years. Insights obtained by applying spatial filtering to the database are also discussed.
    Keywords: spatial autocorrelation; spatial filtering; unemployment; Germany
    JEL: C14 C21 C23 R23
    Date: 2006–05–22
  2. By: Laurent Gobillon; Harris Selod
    Abstract: This paper starts with a review of the economic literature stressing how problems of residential segregation and physical access to jobs can exacerbate urban unemployment.We also present some descriptive statistics on residential segregation and disconnection from jobs in the Paris region using data from the 1999 census of the population and commuting time matrices provided by the ministry of infrastructure for 2000. We then estimate the impact of the local context (segregation and disconnection from jobs) on the transitions from unemployment to work using data from the Labor Force Survey between 1990 and 2002. We show that unemployed workers in segregated areas experience additional difficulties in finding a job. A sensitivity analysis confirms that these spatial effects are robust when the endogeneity of residence is taken into account.
    Keywords: Residential segregation ;spatial mismatch ; social networks ; redlining ; urban unemployment
    JEL: J64 R14
    Date: 2006–06
  3. By: Cristiano Perugini; Marcello Signorelli
    Abstract: This paper analyzes the national and regional (NUTS-2) employment performance and convergence for various aggregations of 27 European countries (EU-25, plus Romania and Bulgaria), mainly using the three employment rates (total, female, older worker) adopted by the European Employment Strategy (EES). At the national level, this analysis confirmed the existence of considerable differences in employment performance between and within the various country aggregations. Empirical analysis highlighted the remarkable net job creations in the EU-15 (and EMU-12) for the period 1997-2003, accompanied by a (national) convergence for all three employment indicators. As regards total employment rates, significant converging trends also emerge at the regional level for both EU-15 and EMU-12 aggregations. In the eight Central European Countries, new EU members (8 CEC-NM), a diverging trend in the total employment rate began in 1999, whereas converging dynamics were limited to the employment rate of older workers in the period 1998-2001. Regional analyses showed significant diverging dynamics in the total employment rates (1999-2003) for the eight CEC-NM regions. At the national level of analyses, the relationship between "progress in transition" and employment performance was also briefly examined. Results show that a simple, stable correlation does not exist. However, a weak U-shaped relationship existing in 1998 shifted downward and evolved toward a positive link in 2003. The main results of cluster analysis of the 53 regions of the ten CECs confirmed a high level of regional labour market diversification, and the fact that sector structure affects employment performance significantly
    JEL: R23 J21 O52 P27
    Date: 2004–12–01
  4. By: Gu, Wulong; Sawchuk, Gary
    Abstract: This paper relates to two understudied, but increasingly important concerns: the measurement of regional integration, and the regional benefits to North American economic integration. The objective is to measure Canada's regional integration in manufacturing industries with that of the United States, and examine the regional impact of growing trade integration on productivity growth and select other economic performance variables. Our research shows that Canada and each of its regions are becoming more integrated in trade in manufactures with the United States, but Ontario is much more integrated than the rest of Canada. While all regions have benefited through improved productivity performance, higher wages and higher output growth, Ontario has been the principal beneficiary. No evidence was found that increased trade integration in manufactures with the United States caused anything more than short-run adjustment losses in employment. Canada and each of its regions have expanded their share of North American manufacturing which stands in sharp contrast to the supposition that it would be the United States that would experience a growth in North American production share (Krugman, 1980).
    Keywords: National accounts, Trade, Manufacturing, Economic conditions, International trade, Manufacturing industries
    Date: 2006–05–31
  5. By: Flavia Cortelezzi; Pierpaolo Giannoccolo
    Abstract: Aim of this paper is to analyse the equilibrium strategies of two developers in the real estate market, when demands are asymmetric. In particular, we are able to consider three key features of the real estate market. First, the cost of redevelop a building is, at least partially, irreversible. Second, the rent levels for different building vary stochastically over time. Third, demand functions for space are interrelated and may produce positive or negative externalities. Using the method of option pricing theory, we address this issue at three levels. First, we model the investment decision of a firm as a pre-assigned leader as a dynamic stochastic game. Then, we solve for the non-cooperative (decentralised) case, and for the perfectly cooperative case, in which redevelopment of an area is coordinated between firms. Finally, we analyse the efficiency/inefficiency of the equilibria of the game. We find that if one firm has a significantly large comparative advantage, the pre-emptive threat from the rival will be negligible. In this case, short burst and overbuilding phenomena as predicted by Grenadier (1996) will occur only as a limiting case.
    Keywords: Duopoly Game, Real Options, Preemptive Strategies, Asymmetric Demands
    JEL: G12 G13
    Date: 2006–06
  6. By: James Galbraith; Enrique Garcilazo
    Abstract: This paper measures pay inequality in the EU during the convergence process to the Monetary Union. The decomposability property of Theil's T statistic permits us to construct a three-level hierarchical panel data set of pay inequalities for the years 1995-2000: between and within regions, countries, and for the European continent as a whole. We find a marked pattern of declining pay inequality across Europe for this period, which is due mainly to the rising (initially, negative) position of the United Kingdom and decreasing positive position of Germany.
    JEL: O52 R23 D63 E24 J31
    Date: 2005–12–07
  7. By: Helge Berger; Michael Ehrmann; Marcel Fratzscher
    Abstract: Monetary policy in the euro area is conducted within a multicountry, multicultural, and multilingual context involving multiple central banking traditions. How does this heterogeneity affect the ability of economic agents to understand and to anticipate monetary policy by the European Central Bank (ECB)? Using a database of surveys of professional ECB policy forecasters in 24 countries, we find remarkable differences in forecast accuracy, and show that they are partly related to geography and clustering around informational hubs, as well as to country-specific economic conditions and traditions of independent central banking in the past. In large part, this heterogeneity can be traced to differences in forecasting models. While some systematic differences between analysts have been transitional and are indicative of learning, others are more persistent.
    Keywords: Monetary policy , Europe , European Central Bank , Economic forecasting , Data collection , Data analysis ,
    Date: 2006–02–17
  8. By: Lunde, Jens (Department of Finance, Copenhagen Business School)
    Abstract: House and flat prices have been through a tremendous bust and boom cycle in Denmark. From 1986 to 1993 real prices for houses and flats dropped by one third on average, foreclosures accounted for around 1/6 of the house and flat turnovers in numbers, and in reality the market for owner-occupied houses and flats was in a crisis. Initiated by a strong interest rate drop and by an expansive finance policy, the market turned. From 1993H1 to 2004H1 real house prices increased 76% and real flat prices 128%. Moreover, Denmark has a leading position in the international household debt race and as in many other countries the fear of the consequences of a strong interest rate increase for the housing market is widespread. Therefore, in order to examine the financial stability among owner-occupiers, a sample of approx. 40,000 owner-occupier families with data at household level has been drawn from the tax statistics for each year from 1987 to 2003. Through the analysis it is shown that the distributions of the owner-occupiers’ capital structure, measured by the net liability/housing wealth ratios, have more or less been the same throughout the 16 years, even during the long-lasting steep house and flat price rise. Moreover, since 1994 the median value of the net liability/income ratio has increased by 71% for all owner-occupiers and by 54% for owner-occupiers between 30-39 years of age.Finally, one last, important aspect of the financial stability of owner-occupiers, namely, their capacity to service their debt has been analysed. The owner-occupiers’ net interest expenditures/ income ratios before tax have been nearly halved from 1987 to 2003. Most of the drop happened during the years of the “housing market failure. From 1994 on the ratios were more slightly reduced and were in 2003 at 8.8% (median value) for all owner-occupiers and 12.2% for owner-occupiers between 30-39 years of age. However, if the reductions of the tax rates for deducting interest expenditures are taken into account, the 2003 after-tax-ratios are only about 2 percentage points below the 1987 after-tax ratios. At March 2005, a new challenge facing Danish owner-occupiers is that 50% of their mortgages carry interest adjustment.
    Keywords: house prices; housing wealth; real estate wealth; housing debt; mortgage debt; personal wealth; personal finance; loan-to-value; debt-to-income; interest expenditures; interest-to-income; financial stability
    JEL: D14 E44 G21 R20 R31
    Date: 2006–05–01

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