nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒11‒04
eight papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. European Regional Convergence in a Human Capital Augmented Solow Model By Hans-Friedrich Eckey; Christian Dreger; Matthias Türck
  2. Exploring the Detailed Location Patters of UK Manufacturing Industries using Microgeographic Data By Duranton, Gilles; Overman, Henry G.
  3. Hotelling Was Right About Snob/Congestion Goods (Asymptotically) By Christian Ahlin; Peter Ahlin
  4. Regional inflation dynamics within and across euro area countries and a comparison with the US By Günter W. Beck; Kirstin Hubrich; Massimiliano Marcellino
  5. Mobility of inventors and the geography of knowledge spillovers. New evidence on US data By Stefano Breschi; Francesco Lissoni
  7. Urban infrastructure finance from private operators : what have we learned from recent experience ? By Annez, Patricia Clarke
  8. The Causes and Consequences of Land Use Regulation: Evidence from Greater Boston By Edward L. Glaeser; Bryce A. Ward

  1. By: Hans-Friedrich Eckey; Christian Dreger; Matthias Türck
    Abstract: In this paper, the process of productivity convergence is investigated for the enlarged European Union using regional (NUTS-2) data. The Solow model extended by human capital is employed as a workhorse. Alternative strategies are proposed to control for spatial effects. All specifications confirm the presence of convergence with an annual speed between 3 and 3.5 percent towards regional steady states. Furthermore, a geographically weighted regression approach indicates a wide variation in the speed of convergence across the regions, where a higher speed is striking in particular in France and the UK. Clusters of convergence can be identified, where regions with high convergence also have high initial income levels.
    Keywords: Solow model, regional convergence, spatial lags, spatial filtering
    JEL: C21 O47 R11 R15
    Date: 2006
  2. By: Duranton, Gilles; Overman, Henry G.
    Abstract: We use a point-pattern methodology to explore the detailed location patterns of UK manufacturing industries. In particular, we consider the location of entrants and exiters vs. continuing establishments, domestic- vs. foreign-owned, large vs. small, and affiliated vs. independent. We also examine co-localisation between vertically-linked industries. Our analysis provides a set of new stylised facts and confirmation for others.
    Keywords: clusters; k-density; localisation; location patterns; spatial statistics
    JEL: C19 L70 R12
    Date: 2006–10
  3. By: Christian Ahlin (Department of Economics, Vanderbilt University); Peter Ahlin (Chatham Financial)
    Abstract: We add congestion/snobbery to the Hotelling model of spatial competition. For any firm locations on opposite sides of the midpoint, a pure strategy price equilibrium exists and is unique if congestion costs are strong enough relative to transportation costs. The maximum distance between firms in any pure strategy symmetric location equilibrium declines toward zero as congestion costs increase relative to transportation costs. For any non-zero minimum distance between firms, high enough congestion costs relative to transportation costs guarantee that the unique pure strategy symmetric location equilibrium involves minimum differentiation. In this sense Hotelling was right about differentiation of snob/congestion goods.
    Keywords: Hotelling, spatial competition, differentiation, congestion, snobbery
    JEL: D21 D43 R12
    Date: 2006–10
  4. By: Günter W. Beck (Goethe University Frankfurt and CFS. Contact: Faculty of Economics and Business Administration, Goethe University Frankfurt, Mertonstrasse 17, 60325 Frankfurt, Germany.); Kirstin Hubrich (Corresponding author: Research Department, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Massimiliano Marcellino (IEP-Bocconi University, IGIER and CEPR. Contact: Bocconi University, IGIER, Via Salasco, 5, Milano 20136, Italy.)
    Abstract: We investigate co-movements and heterogeneity in inflation dynamics of different regions within and across euro area countries using a novel disaggregate dataset to improve the understanding of inflation differentials in the European Monetary Union. We employ a model where regional inflation dynamics are explained by common euro area and country specific factors as well as an idiosyncratic regional component. Our findings indicate a substantial common area wide component, that can be related to the common monetary policy in the euro area and to external developments, in particular exchange rate movements and changes in oil prices. The effects of the area wide factors differ across regions, however. We relate these differences to structural economic characteristics of the various regions. We also find a substantial national component. Our findings do not differ substantially before and after the formal introduction of the euro in 1999, suggesting that convergence has largely taken place before the mid 90s. Analysing US regional inflation developments yields similar results regarding the relevance of common US factors. Finally, we find that disaggregate regional inflation information, as summarised by the area wide factors, is important in explaining aggregate euro area and US inflation rates, even after conditioning on macroeconomic variables. Therefore, monitoring regional inflation rates within euro area countries can enhance the monetary policy maker’s understanding of aggregate area wide inflation dynamics. JEL Classification: E31, E52, E58, C33.
    Keywords: Regional inflation dynamics, euro area and US, common factor models.
    Date: 2006–10
  5. By: Stefano Breschi (CESPRI-Bocconi University, Milan, Italy); Francesco Lissoni (Brescia University and CESPRI-Bocconi University, Italy)
    Abstract: In this paper we exploit new data on US inventors in Organic Chemistry, Pharmaceuticals, and Biotechnology to revisit the JTH test of the localization of knowledge spillovers (Jaffe, Trajtenberg, and Henderson; 1993). We find that inventors who patent across different companies contribute extensively to the observed citation patterns, both directly (through personal self-citations) and indirectly, by linking the various companies via a social network conducive to more citations. To the extent that the geographical mobility of these “cross-firm” inventors is quite limited, the resulting social networks and citations patterns are found to be bounded in space. We conclude that spatial distance, as measured in the JTH experiment, is just a proxy for a much more important variable, such as social distance between inventors. In a similar vein, we show that technological distance, introduced by Thompson and Fox-Kean (2005) to question the soundness of the JTH experiment, is also a proxy of social distance.
    Keywords: Knowledge diffusion, Localized spillovers, Social networks
    JEL: O33 R12 Z13
    Date: 2006–10
  6. By: Hjalmarsson, Erik (Division of International Finance, Federal Reserve Board); Hjalmarsson, Randi (University of Maryland, School of Public Policy)
    Abstract: We test for efficiency in the market for Swedish co-ops by examining the negative relationship between the sales price and the present value of future rents. If the co-op housing market is efficient, the present value of co-op rental payments due to underlying debt obligations of the cooperative should be fully reflected in the sales price. However, we find that, on average, a one hundred kronor increase in the present value of future rents only leads to a 45 to 65 kronor reduction in the sales price; co-ops with higher rents are thus relatively overpriced compared to those with lower rents. Our analysis indicates that pricing tends to be more efficient in areas with higher educated and wealthier buyers. By relying on cross-sectional relationships in the data, our results are less sensitive to transaction costs and other frictions than time-series tests of housing market efficiency. <p>
    Keywords: Housing markets; Market efficiency; Cooperative housing
    JEL: G14 R21 R31
    Date: 2006–09–30
  7. By: Annez, Patricia Clarke
    Abstract: The author examines the role of private participation in infrastructure (PPI) in mobilizing finance for key urban services, that is, urban roads, municipal solid waste management, and water and sanitation since the early 1990s when private participation came to be seen as a key element in infrastructure development. Her review indicates that for financing urban services, PPI has disappointed-playing a far less significant role than was hoped for, and which might be expected given the attention it has received and continues to receive in strategies to mobilize financing for infrastructure. Looking beyond the number, the author examines transactions and finds that there are good reasons-practical, political, economic and institutional-for these disappointments. Recommending that cities in developing countries try harder is not likely to relieve all these constraints. Experience shows that there are a number of features that raise the risk profile of urban infrastructure for private investors, which has meant that the bulk of the transactions that have taken place have been exceptions rather than harbingers of a growing trend. Many of the measures that could reduce the risk profile are outside the control of many cities, others unlikely to change, and yet another group of steps to be taken that would improve prospects for urban service provision, whether in the hands of public or private operators. These findings suggest a more pragmatic and selective approach to the focus on PPI as a source of finance, and more focus on the array of some of the fundamental steps, among them strengthening the public finances of cities to improve both the capacity to deliver services and to reduce the risks that private investors must take when they invest in urban infrastructure.
    Keywords: Transport Economics Policy & Planning,Public Sector Economics & Finance,Non Bank Financial Institutions,Urban Slums Upgrading,Urban Services to the Poor
    Date: 2006–11–01
  8. By: Edward L. Glaeser; Bryce A. Ward
    Abstract: Over the past 30 years, eastern Massachusetts has seen a remarkable combination of rising home prices and declining supply of new homes. The reductions in new supply don't appear to reflect a real lack of land, but instead reflect a response to man-made restrictions on development. In this paper, we examine the land-use regulations in greater Boston. There has been a large increase in the number of new regulations, which differ widely over space. Few variables, other than historical density and abundant recreational water, reliably predict these regulations. High lot sizes and other regulations are associated with less construction. The regulations boost prices by decreasing density, but density levels seem far too low to maximize total land value.
    JEL: R14 R21 R31
    Date: 2006–10

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