nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒08‒08
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spillover Effects of Spatial Growth Poles - a Reconciliation of Conflicting Policy Targets? By Alexander Kubis; Mirko Titze; Joachim Ragnitz
  2. Governmental activity, integration, and agglomeration By Ingrid Ott; Susanne Soretz
  3. Spatial econometric analysis of determinants and strategies of FDI in Russian regions in pre- and post-1998 financial crisis periods By Ledyaeva, Svetlana
  4. Knowledge flows across European regions By Raffaele Paci; Stefano Usai
  5. National, regional and metro-specific factors of the U.S. housing market By Dong Fu
  6. Spatial Stochastic Frontier Models: accounting for unobserved local determinants of inefficiency By Alexandra M. Schmidt; Ajax R. B. Moreira; Thais C. O. Fonseca; Steven M. Helfand
  7. "Dual' gravity: Using spatial econometrics to control for multilateral resistance" By Kristian Behrens; Cem Ertur; Wilfried Koch
  8. Housing Supply and Land Use Regulation in the Netherlands By Wouter Vermeulen; Jan Rouwendal
  9. Urbaphobie et désir d'urbain, au péril de la ville By Sallez, Alain
  10. Detecting a cluster in a region without complete statistical data, using Input-Output analysis: The case of the Rioja wine cluster By Mikel Larreina
  11. The Dynamics of Export Specialisation in the Regions of the Italian Mezzogiorno: Persistence and Change By Paolo Guerrieri; Simona Iammarino
  12. Should Urban Transit Subsidies Be Reduced? By Parry, Ian W.H.; Small, Kenneth
  13. Decentralization of territorial policy in Italy - the coherence with the model of multi-level governance and the effects on responsibilities of public spending By Bagarani, Massimo; Bonetti, Antonio; Zampino, Simona
  14. On the Geographic and Cultural Determinants of Bankruptcy By Stefan Buehler; Christian Kaiser; Franz Jaeger
  15. The impact of housing market institutions on labour mobility; a European cross-country comparison By Thomas de Graaff; Michiel van Leuvensteijn

  1. By: Alexander Kubis; Mirko Titze; Joachim Ragnitz
    Abstract: Regional economic policy faces the challenge of two competing policy goals - reducing regional economic disparities vs. promoting economic growth. The allocation of public funds has to weigh these goals particularly under the restriction of scarce financial re- sources. If, however, some region turns out to be a regional growth pole with positive spillovers to its disadvantaged periphery, regional policies could be designed to recon- cile the conflicting targets. In this case, peripheral regions could indirectly participate in the economic development of their growing cores. We start our investigation by defining and identifying such growth poles among German regions on the NUTS 3 administrative level based on spatial and sectoral effects. Using cluster analysis, we determine significant characteristics for the general identification of growth poles. Patterns in the sectoral change are identified by means of the change in the employment. Finally, we analyze whether and to what extent these growth poles ex- ert spatial spillover effects on neighbouring regions and thus mitigate contradictory in- terests in regional public policy. For this purpose, we apply a Spatial-Cross-Regressive- Model (SCR-Model) including the change in the secondary sector which allows to con- sider functional economic relations on the administrative level chosen (NUTS 3).
    Keywords: Size and Spatial Distributions of Regional Economic Activity; Cross-Sectional Models; Spatial Models; Treatment Effect Models; Regional, Urban, and Rural Analyses
    JEL: R12 C21 O18
    Date: 2007–07
  2. By: Ingrid Ott (Institute of Economics, Leuphana University of Lüneburg); Susanne Soretz (Department Growth and Distribution, University of Hannover)
    Abstract: This paper analyzes, within a regional growth model, the impact of productive governmental policy and integration on the spatial distribution of economic activity. Integration is understood as enhancing territorial cooperation between the regions, and it describes the extent to which one region may benefit from the other region's public input, e.g. the extent to which regional road networks are connected. Both, integration and the characteristics of the public input crucially affect whether agglomeration arises and if so to which extent economic activity is concentrated: As a consequence of enhanced intergation, agglomeration is less likely to arise and concentration will be lower. Relative congestion reinforces agglomerartion, thereby increasing equilibrium concentraion. Due to the congestion externalities, the market outcome ends up in subotimally high concentration.
    Keywords: public inputs, agglomeration, integration
    JEL: O4 R5
    Date: 2006–07
  3. By: Ledyaeva, Svetlana (BOFIT)
    Abstract: Using a spatial autoregressive model of cross-sectional and panel data, we study the determinants and dominant strategies of FDI inflows into Russia before and after the 1998 financial crisis. The important determinants of FDI inflows into Russian regions since transition began appear to be market size, the presence of large cities and sea ports, oil and gas availability, and political and legislative risks. Since 1998, it appears the importance of big cities, the Sakhalin region, oil and gas resources and legislation risk has increased, while the importance of political risk and port availability has decreased. Our results also reveal a shift from horizontal FDI strategy to a regional trade-platform FDI strategy. While theory anticipates combined vertical and horizontal motives for regional trade-platform strategies, the lack of evidence of a vertical motive in the Russian case suggests import substitution presently plays a significant role in regional trade-platform FDI. Using a multiple spatial lags approach, we show that neighbouring regions with ports have emerged post-crisis as competitors for FDI and identify agglomeration effects in FDI between adjacent regions with and without ports during the period 1999-2002.
    Keywords: Foreign Direct Investment; Russian regions; FDI strategy; spatial autoregressive model
    JEL: C21 E22 F21
    Date: 2007–07–24
  4. By: Raffaele Paci; Stefano Usai
    Abstract: The recent resurgence of growth studies has clearly established that technological progress and knowledge accumulation are among the most important factors in determining the performance of regional and national economic systems. Nonetheless, few empirical studies have tried to analyse the flows of technology and knowledge across regional economies in Europe due to the lack of adequate indicators. In this paper we propose new evidence on the characteristics of knowledge flows across European regions based on a statistical databank, set up by CRENoS, on regional patenting and citations at the European Patent Office spanning from 1978 to 2004 and classified by ISIC sectors (3 digit). We consider 175 regions of 17 countries in Europe assigning each patent a region according to the place of residence of the inventors; then, we examine in- and out-flows of patent citations as a proxy of knowledge connections, while looking also at their sectoral differences and dynamics through time. The econometric analysis is based on a model where the transmission and exchange of knowledge across regions is mainly affected by geographical distance together with a set of spatial dummy variables. Moreover, we make several controls to check for the robustness of our results with respect to the inclusion of other characteristics of the origin and destination regions (production structure, economic conditions and technological efforts) as well as different estimation methods. The main result is that knowledge flows decrease as the geographical distance between the origin and the destination region increase. Furthermore, knowledge flows tend to be higher among contiguous regions and areas within the same country.
    Date: 2007
  5. By: Dong Fu
    Abstract: We build a dynamic latent factor model to decompose housing prices in major U.S. metropolitan areas into national, regional, and metro-specific idiosyncratic factors, in order to distinguish the different dynamics behind housing price movements. We find that there is a distinctive national factor that has contributed about one-fourth of the individual metropolitan's housing price volatility. The regional factor accounts for another one-fourth and the idiosyncratic factor explains about half of housing price fluctuations. However, at the regional level, the factors' contributions vary across a fairly wide range. Although it only has modest explanatory power of housing price volatility, the national factor seems to account for much of the price increase in the current housing boom. Interestingly, the regional factor exerts negative influence on housing prices in a fairly large number of metros lately, only to be outweighed by the national factor's positive contribution. We also explore the possible forces influencing the national factor of housing price movements, including monetary policy, population growth, real economic activity, general inflation and other asset prices.
    Date: 2007
  6. By: Alexandra M. Schmidt; Ajax R. B. Moreira; Thais C. O. Fonseca; Steven M. Helfand
    Abstract: In this paper, we analyze the productivity of farms across n = 370 municipalities located in the Center-West region of Brazil. We propose a stochastic frontier model with a latent spatial structure to account for possible unknown geographical variation of the outputs. This spatial component is included in the one-sided disturbance term. We explore two different distributions for this term, the exponential and the truncated normal. We use the Bayesian paradigm to fit the proposed models. We also compare between an independent normal prior and a conditional autoregressive prior for these spatial effects. The inference procedure takes explicit account of the uncertainty when considering these spatial effects. As the resultant posterior distribution does not have a closed form, we make use of stochastic simulation techniques to obtain samples from it. Two different model comparison criteria provide support for the importance of including these latent spatial effects, even after considering covariates at the municipal level.
    Date: 2006–10
  7. By: Kristian Behrens (CORE, Universite catholique de Louvain); Cem Ertur (LEO, Universite d'Orleans, France); Wilfried Koch (LEG, Universite de Bouugogne, France)
    Abstract: We propose a quantity-based 'dual' version of the gravity equation that yields an estimating equation with both cross-sectional interdependence and spatially lagged error terms. Such an equation can be concisely estimated using spatial econometric techniques. We illustrate this methodology by applying it to the Canada-U.S. data set used previously, among others, by Anderson and van Wincoop (2003) and Feenstra (2002, 2004). Our key result is to show that controlling directly for spatial interdependence across trade flows, as suggested by theory, significantly reduces border effects because it captures 'multilateral resistance'. Using a spatial autoregressive moving average specification, we find that border effects between the U.S. and Canada are smaller than in previous studies: about 8 for Canadian provinces and about 1.3 for U.S. states. Yet, heterogeneous coefficient estimations reveal that there is much variation across provinces and states.
    Date: 2007–06
  8. By: Wouter Vermeulen (CPB, The Hague, and VU University Amsterdam); Jan Rouwendal (VU University Amsterdam)
    Abstract: In spite of a growing recognition of the importance of supply conditions for the level and volatility of house prices, empirical work on housing supply outside the US is scarce. This paper considers various measures of housing supply in the Netherlands, where real house prices have roughly tripled since 1970. Besides the volume of investment in residential structures, and new housing construction in units, we derive time series of structure and location quality in a hedonic analysis. Each of these variables appears to be almost fully inelastic with respect to house prices in at least the short to medium long run. Further analysis of the quality of location index shows that conventional models of competitive land and housing markets cannot account for these findings. However, they may be well explained in terms of the rather extensive body of interventions by the Dutch government.
    Keywords: housing supply; residential investment; housing markets; land use regulation
    JEL: E22 R31 R52
    Date: 2007–07–31
  9. By: Sallez, Alain (ESSEC Business School)
    Abstract: Individual housing is preferred by French people since world war 2, 87 % in 2006. This tendency has given birth to urban sprawl rejected by city-planner because it is a form of non sustainable development. They propose urban politics of densification, "the compact city", which may fail if one does not take into account the social demand.
    Keywords: City Planning; Habitat; Urban Sprawl; Urbaphoby
    JEL: R00
    Date: 2007–05
  10. By: Mikel Larreina
    Abstract: In recent times the role of wine in regional economies has been a major political issue, highlighting the importance of measuring accurately the multiplier effect of wine in regions with large wine sectors. This paper provides a case study of how to construct vital parts of an Input-Output table for a region without complete statistics, and how to use them thereafter to interpret the economic structure of the region. This methodology may be adapted to other wine clusters, and to related clusters, such as brewing and distilling
    Keywords: Wine, Rioja, cluster, Input-Output, regional economy.
    JEL: R11 R15 Q19
    Date: 2007–06
  11. By: Paolo Guerrieri (University of Rome and IAI, Rome); Simona Iammarino (SPRU, University of Sussex)
    Abstract: In the most recent years, the pattern of economic growth of the Italian Mezzogiorno has undergone a significant transformation. Up to the beginning of the 1990s, the whole area was by and large characterised by a single macroeconomic model of income and employment, whose dynamics were strongly based upon State intervention. By the early 1990s, the end of the special public support for the Mezzogiorno - as a consequence, to a large extent, of the completion of the Single European Market in 1992 - was only partially followed by appropriate legislative tools for the support of less favoured areas. Since then, the Italian southern regions as a whole have gone through a worsening of their economic fundamentals, particularly with regard to income growth and unemployment. At the same time, the differentials in the paths of socio-economic development within the southern area have been strengthening, confirming the existence of "many Mezzogiorni" previously noted by the specialised literature. Our current research line aims at providing the basis for devising a policy framework within which trying to identify new directions to untangle regional "vulnerability", with particular reference to the dramatic changes imposed by internationalisation and globalisation processes. The objective of the present paper is to investigate to what extent the evolution of export patterns and performance by Mezzogiorno province fits in the picture of intra-area growing differentiation. The combined significance of cumulativeness and gradual change in specialisation patterns is examined by testing the extent of continuity in the sectoral composition of trade specialisation profiles by province during the period 1985-2000. The export performance and the models of specialisation seem to bear out the view of "many Mezzogiorni" and show that peripheral regions and provinces have adopted rather distinct strategies to adjust to the rapidly increasing economic integration.
    Keywords: income growth and unemployment, regional trade specialisation, Italy, export patterns
    JEL: J00 O18 O52
    Date: 2007–06–01
  12. By: Parry, Ian W.H. (Resources for the Future); Small, Kenneth
    Abstract: This paper derives intuitive and empirically useful formulas for the optimal pricing of passenger transit and for the welfare effects of adjusting current fare subsidies, for peak and off-peak urban rail and bus systems. The formulas are implemented based on a detailed estimation of parameter values for the metropolitan areas of Washington (D.C.), Los Angeles, and London. Our analysis accounts for congestion, pollution, and accident externalities from automobiles and from transit vehicles; scale economies in transit supply; costs of accessing and waiting for transit service as well as service crowding costs; and agency adjustment of transit frequency, vehicle size, and route network to induced changes in demand for passenger miles. The results support the efficiency case for the large fare subsidies currently applied across mode, period, and city. In almost all cases, fare subsidies of 50 percent or more of operating costs are welfare improving at the margin, and this finding is robust to alternative assumptions and parameters.
    Keywords: transit subsidies, scale economies, traffic congestion, welfare effects
    JEL: R48 H21
    Date: 2007–07–16
  13. By: Bagarani, Massimo; Bonetti, Antonio; Zampino, Simona
    Abstract: The past twenty years have seen the communitarian system of multi level governance (MLG) being established as a model of territorial policies governance. In the MLG, several levels of jurisdiction participate to decision making and Regions assume a relevant role in managing policies of development. This article highlights how such a system, mostly led by Public Institutions, cuts transaction costs being based on principles aimed at increasing the number of decision makers, as well as at making all governing levels and the processes of institutional coordination more effective. The article investigates two issues: a) to what extent the reorganization of the Italian system is compatible with the main characteristics of Communitarian MLG system in the governance of territorial policies; b) to what extent the decentralization in programming policies of development has gone with a transfer of capital expenses from a central (Central Administration) to local (Regional and Local Bodies) jurisdictions. The hypotheses to be tested refer to the decentralization process so far recorded in Italy: the first hypothesis is that such a process would not be fully shareable, neither with regard to the characteristics of the Communitarian MLG model, nor to the general considerations deriving by the theory of fiscal federalism; secondly, the process wouldn’t seem suitably supported by a symmetrical transfer of the expenses from the Central Government’s jurisdiction to local bodies’.
    Keywords: Territorial policy, Multi Level Governance, institutional decentralization, OLS panel fixed-effects models
    JEL: H7 R5 R58
    Date: 2007–07–19
  14. By: Stefan Buehler (Socioeconomic Institute, University of Zurich); Christian Kaiser (Credit Suisse); Franz Jaeger (University of St. Gallen)
    Abstract: This paper examines the role of geography and culture in explaining bankruptcy. We adopt survival analyses to model the bankruptcy risk of a firm, allowing for time-varying covariates. Based on a large sample from all major sectors of the Swiss economy, we find the following results: (i) The geographic location of a firm, which is characterized using a core-periphery approach, has a significant impact on its bankruptcy risk; (ii) Variables proxying for the cultural environment of a firm have significant explanatory power; (iii) The results of the previous literature on the standard determinants of bankruptcy are confirmed.
    Keywords: bankruptcy, geography, culture, exit
    JEL: C41 R10 Z10
    Date: 2007–02
  15. By: Thomas de Graaff; Michiel van Leuvensteijn
    Abstract: In this paper, we study the effects of housing market institutions on labour mobility. We construct durations for individuals leaving their current job for a different job, becoming unemployed or leaving the labour market, from a sample of households from 14 European countries in 1994–2001. We merge this data with country specific housing market institutions, such as transaction taxes, and language and religion diversity. Similar to previous studies, estimated hazards indicate that home-ownership reduces job-to-job mobility as well as the probability to become unemployed or economically inactive on a individual level. However, a comparison between countries reveals that countries with high levels of homeownership rates also have high levels of unemployment. Therefore, this paper is able to reconcile the seemingly contrasting empirical results from both the macroeconomic and the microeconomic level.
    Keywords: housing market; transaction costs; labor mobility; unemployment
    JEL: J60 J61 R23
    Date: 2007–06

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