nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒07‒28
five papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Forecasting regional labor market developments under spatial heterogeneity and spatial correlation By Longhi, Simonetta; Nijkamp, Peter
  2. Superstar Cities By Joseph Gyourko; Christopher Mayer; Todd Sinai
  3. A Regional Study of the Colombian Corporate Sector: Differences, Trends and Developments in Different Cities By Peter Rowland
  4. Supply Constraints and Housing Prices By Saku Aura; Thomas Davidoff
  5. Impacts of Tourism and Fiscal Expenditure on Remote Islands in Japan: A Panel Data Analysis By Noriko Ishikawa; Mototsugu Fukushige

  1. By: Longhi, Simonetta (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, Peter
    Abstract: Because of heterogeneity across regions, economic policy measures are increasingly targeted at the regional level, and the need for forecasts at the regional level is rapidly increasing. The data available to compute regional forecasts is usually based on a pseudo-panel of a limited number of observations over time, and a large number of areas (regions) strongly interacting with each other. The application of traditional time-series techniques to distinct time series of regional data is likely to be a suboptimal forecasting strategy. In the field of regional forecasting of socioeconomic variables, both linear and nonlinear models have recently been applied and evaluated. However, often such analyses ignore the spatial interactions among regions. We evaluate the ability of different statistical techniques - namely spatial error and spatial cross-regressive models - to correct for misspecifications due to neglected spatial correlation in the data. Our empirical application concerns short-term forecasts of employment in 326 West German regions; we find that the superimposed spatial structure that is required for the estimation of spatial models improves the forecasting performance of non-spatial models.
    Keywords: Space-Time Data; Regional Forecasts; Spatial Heterogeneity; Spatial Correlation
    JEL: R12 C53
    Date: 2006
  2. By: Joseph Gyourko; Christopher Mayer; Todd Sinai
    Abstract: Differences in house price and income growth rates between 1950 and 2000 across metropolitan areas have led to an ever-widening gap in housing values and incomes between the typical and highest-priced locations. We show that the growing spatial skewness in house prices and incomes are related and can be explained, at least in part, by inelastic supply of land in some attractive locations combined with an increasing number of high-income households nationally. Scarce land leads to a bidding-up of land prices and a sorting of high-income families relatively more into those desirable, unique, low housing construction markets, which we label “superstar cities.” Continued growth in the number of high-income families in the U.S. provides support for ever-larger differences in house prices across inelastically supplied locations and income-based spatial sorting. Our empirical work confirms a number of equilibrium relationships implied by the superstar cities framework and shows that it occurs both at the metropolitan area level and at the sub-MSA level, controlling for MSA characteristics.
    JEL: R0 J0 D4 N9
    Date: 2006–07
  3. By: Peter Rowland
    Abstract: The study presented here looks at the Colombian corporate sector broken down by city. In particular, it studies the eight main cities of the country. It is an initial study, maybe the first of its kind, and it aims to act as a foundation for future research in the area. A database obtained from the Superintendencia de Sociedades is used for the analysis. Structural differences between the cities in 2003 are studied, as well as the development of the cities between 1996 and 2003. The study shows that the 100 largest firms in the country are almost exclusively located in the country’s four largest cities. Rather more surprisingly, it shows that small and medium-sized enterprises (SMEs) are generally concentrated to the country’s larger cities, and particularly to Bogotá, while many medium-sized and smaller cities completely lack SMEs. The study also shows that, in terms of aggregate sales, the cities have developed very differently.
  4. By: Saku Aura (Department of Economics, University of Missouri-Columbia); Thomas Davidoff
    Abstract: This paper analyzes the effects of land use constraints on housing prices. We provide a new framework for evaluating policy when mobility across regions is allowed but limited. A key result is that loosening regulatory constraints within individual regions would have little effect on prices for plausible parameterizations. For example, we show reasonable conditions under which, even if every building in Manhattan were 100 stories tall, prices would fall by less than 15 percent.
    Keywords: Housing Supply and Markets; Regulatory Policies; Land Use Patterns.
    JEL: R21 R14 R38
    Date: 2006–05–22
  5. By: Noriko Ishikawa (Graduate School of Science and Technology, Kobe Universit); Mototsugu Fukushige (Graduate School of Economics, Osaka University)
    Abstract: Japan consists of many small inhabited islands in addition to four main islands. We examine the impact of fiscal expenditure and the number of tourists on per capita taxable income in remote islands using panel data analysis. The results show that both fiscal expenditure and population size have significant positive impacts on per capita taxable income, whereas the number of tourists does not have statistically significant impact. They indicate that tourism development would not work as a substitute for financial support from the government. In other words, continuous financial support may be needed to maintain the islandsf economies.
    Keywords: Tourism Multiplier, Fiscal Multiplier, Remote Islands, Panel Data Analysis
    JEL: O23 R58 Q56 L83
    Date: 2006

This nep-geo issue is ©2006 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.