nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒09‒02
eight papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Measuring the persistence of spatial autocorrelation: How long does the spatial connection between housing markets last? By Ryan R. Brady
  2. Does Foreign Direct Investment Promote Regional Development in Developed Countries? A Markov Chain Approach for US States By Peter Nunnenkamp; Rudi Stracke
  3. A traffic plan to make residential areas car-limited : traffic planning in Groningen By Tsubohara, S.
  4. Location-Specific Human Capital, Location Choice and Amenity Demand By Douglas J. Krupka
  5. Does Foreign Direct Investment Promote Regional Development in Developed Countries? A Markov Chain Approach for US States By Eckhardt Bode; Peter Nunnenkamp
  6. How Disasters Affect Local Labor Markets: The Effects of Hurricanes in Florida By Ariel R. Belasen; Solomon W. Polachek
  7. Contracting for Government Services: Theory and Evidence from U.S. Cities By Jonathan Levin; Steven Tadelis
  8. The Property Market and the Macroeconomy of the Mainland: A Cross Region Study By Wensheng Peng; Dickson C. Tam; Matthew S. Yiu

  1. By: Ryan R. Brady (United States Naval Academy)
    Abstract: How fast and how long (and to what magnitude) does a change in housing prices in one region affect its neighbors? In this paper, I apply a time series technique for measuring impulse response functions from linear projections to a spatial autoregressive model of housing prices. For a dynamic panel of California counties, the data reveal that spatial autocorrelation between regional housing prices is highly persistent over time, lasting up to two and half years. This result, and the econometric techniques employed, should be of interest to not only housing and regional economists, but to a variety of applied econometricians as well.
    Date: 2007–08
  2. By: Peter Nunnenkamp; Rudi Stracke
    Keywords: FDI approvals, sub-categories of FDI, location choice, economic growth, regional divergence
    JEL: F23 O18 O53
  3. By: Tsubohara, S. (Groningen University)
    Date: 2007
  4. By: Douglas J. Krupka (IZA)
    Abstract: The role of amenities in the flow of migrants has been debated for some years. This paper advances an original model of amenities that work through household production instead of directly through the utility function. Area characteristics (amenities) affect household production, causing certain kinds of human capital investments to be rewarded more than others. Area heterogeneity makes such investments location-specific, in that some areas’ characteristics will reward certain kinds of knowledge more than others. This specificity - along with a period of exogenous location (before migration can be carried out) - increases the opportunity costs of moving, diminishes migration flows between dissimilar locations and increases valuation of amenities which were present in the originating area. These theoretical results emphasize people’s sorting across areas and thus differ from the results of the standard model of compensating differentials. Empirical tests of the model’s predictions using NLSY79 data show that childhood investments affect migration flows in the way proposed by the model.
    Keywords: migration, amenities, human capital, location specificity
    JEL: R23 J61
    Date: 2007–08
  5. By: Eckhardt Bode; Peter Nunnenkamp
    Keywords: Markov transition probability; likelihood ratio test; FDI; per-capita income; regional development; United States of America
    JEL: F23 O18 O51
  6. By: Ariel R. Belasen (Saint Louis University); Solomon W. Polachek (State University of New York at Binghamton and IZA)
    Abstract: Exogenous shocks often impact a local labor market more than at the national level. This study improves upon the standard Difference in Difference (DD) approach by examining exogenous shocks using a Generalized Difference in Difference (GDD) econometric approach that identifies the effects of shocks resulting from hurricanes. Based on the Quarterly Census of Employment and Wages (QCEW) data on earnings and employment, the earnings of an average worker in Florida will increase as much as four percent within the first quarter of being hit directly by a hurricane, whereas the effects of a hurricane occurring in a neighboring county move earnings per worker in the opposite direction by roughly the same percentage. As time goes by, workers in both sets of counties will experience faster growth in their earnings than workers in completely unaffected counties; however, this is coupled with a slower growth rate in employment. Powerful hurricanes have greater effects than their weaker counterparts. Additionally, the shifts in earnings and employment can be traced back, in part, to geographic features of the counties, namely that the coastal and Panhandle counties exhibit greater effects than landlocked counties. Although focus is on hurricanes in Florida, this GDD technique is applicable to a wider range of exogenous shocks.
    Keywords: exogenous shock, difference-in-difference estimation, local labor markets, earnings, employment, hurricanes
    JEL: J23 J49 Q54 R11
    Date: 2007–08
  7. By: Jonathan Levin; Steven Tadelis
    Abstract: Local governments can provide services with their own employees or by contracting with private or public sector providers. We develop a model of this "make-or-buy" choice that highlights the trade-off between productive efficiency and the costs of contract administration. We construct a dataset of service provision choices by U.S. cities and identify a range of service and city characteristics as significant determinants of contracting decisions. Our analysis suggests an important role for economic efficiency concerns, as well as politics, in contracting for government services.
    JEL: D23 D73 H11 L33
    Date: 2007–08
  8. By: Wensheng Peng (Hong Kong Monetary Authority); Dickson C. Tam (Hong Kong Monetary Authority); Matthew S. Yiu (Hong Kong Institute for Monetary Research)
    Abstract: This paper studies the nexus between the property market and the macroeconomy of Mainland China in 1998-2004, using panel data models covering 31 provinces and major cities. The estimates suggest three main conclusions. First, there seemed to be a two-way linkage between property price and GDP growth. In particular, property price increase had a significant positive impact on investment, but no evidence of a wealth effect on consumption is obtained. Second, bank credit expansion did not seem to play an 'accelerating' role in property price inflation, although the latter is found to have contributed to bank credit increase in recent years. Third, property price growth may have deviated from fundamentals in coastal areas, as evidenced by a negative relationship between housing and rental prices.
    Date: 2007–03

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