nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒03‒14
eleven papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The productivity advantages of large cities: Distinguishing agglomeration from firm selection By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Puga, Diego; Roux, Sébastien
  2. Spatial inequalities explained: evidence from Burkina Faso By Johannes Gräb; Michael Grimm
  3. The Effect of New Business Formation on Employment - The Dominance of Density By Alexandra Schroeter
  4. Differentiated bank strategies across the territory: an exploratory analysis By Marco Crocco; Ana Tereza Lanna Figueiredo
  5. The Time-Series Properties on Housing Prices: A Case Study of the Southern California Market By Rangan Gupta; Stephen M. Miller
  6. Regional Infrastructure and Firm Investment. Theory and Empirical Evidence for Italy By Francesco Aiello; Alfonsina Iona; Leone Leonida
  7. Determinants of Taiwanese investment in China: An agglomeration economies-based perspective By Chen, George Shih-Ku
  8. Changes in U.S. Hospitalization and Mortality Rates Following Smoking Bans By Kanaka D. Shetty; Thomas DeLeire; Chapin White; Jayanta Bhattacharya
  9. Inversión en TICs y productividad: un breve panorama y una primera aproximación al caso de las regiones españolas By Angel de la Fuente
  10. Changes in Industrial Concentration in the Croatian Economy (1995-2006) By Darko Tipurić; Mirjana Pejić Bach
  11. A New Proxy of Social Capital and the Economic Performance across the Italian Regions By Luca Andriani; Dimitrios Karyampas

  1. By: Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Puga, Diego; Roux, Sébastien
    Abstract: Firms are more productive on average in larger cities. Two explanations have been offered: agglomeration economies (larger cities promote interactions that increase productivity) and firm selection (larger cities toughen competition allowing only the most productive to survive). To distinguish between them, we nest a generalised version of a seminal firm selection model and a standard model of agglomeration. Stronger selection in larger cities left-truncates the productivity distribution whereas stronger agglomeration right-shifts and dilates the distribution. We assess the relative importance of agglomeration and firm selection using French establishment-level data and a new quantile approach. Spatial productivity differences in France are mostly explained by agglomeration.
    Keywords: agglomeration; cities; firm selection; productivity
    JEL: C52 D24 R12
    Date: 2009–03
  2. By: Johannes Gräb; Michael Grimm
    Abstract: Empirical evidence suggests that regional disparities in incomes are often very high, that these disparities do not necessarily disappear as economies grow and that these disparities are itself an important driver of growth. We use a novel approach based on multilevel modeling to decompose the sources of spatial disparities in incomes among households in Burkina Faso. We show that spatial disparities are not only driven by the spatial concentration of households with particular endowments but to a large extent also by disparities in community endowments. Climatic differences across regions do also matter, but to a much smaller extent.
    Keywords: spatial inequality, poverty, multilevel modeling, decomposition, Sub-Saharan Africa
    JEL: C21 I32 O12 R12
    Date: 2009
  3. By: Alexandra Schroeter (Friedrich Schiller University Jena, Faculty of Economics and Business Administration)
    Abstract: Empirical analyses show that the employment effects of start-ups are highest in agglomerations, whereas moderately congested areas exhibit only modest effects, and weak or even no significant effects could be found in rural regions. This paper will set out to show that these discrepancies arise from specific characteristics of urban areas. The magnitude of the employment effects of entry in agglomerations can, therefore, be regarded as a further kind of agglomeration benefit which has not been discussed in the literature yet. In particular, it is explained how the distinct characteristics of urban areas contribute to the emergence of high-quality start-ups that are known to cause larger employment effects than other types of new businesses. In addition, this paper argues that the relatively intense competition in urban areas further stimulates the economic effects of new business formation in agglomerations.
    Keywords: Entrepreneurship, new business formation, regional development, entrepreneurship policy
    JEL: M13 O1 O18 R11
    Date: 2009–03–05
  4. By: Marco Crocco (Cedeplar-UFMG); Ana Tereza Lanna Figueiredo (Cedeplar-UFMG e PUC-MG)
    Abstract: This paper aims to investigate to what extent there is a differentiated regional bank strategy in the Brazilian economy. Based on the Post Keynesian theory of regional liquidity preference (Dow, 1993), the paper analyses consolidate balance sheets of banks’ branches from several Brazilian regions. Through the analysis of some indicators that were built using the data, the article finds evidence for the thesis that the Brazilian Bank System’s strategy is heterogeneous across space. Furthermore, we conclude that this behaviour reinforces existing uneven regional patterns of development of the economy.
    Keywords: bank strategy, regional liquidity preference, regional economics, development.
    Date: 2009–01
  5. By: Rangan Gupta (Department of Economic, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada)
    Abstract: We examine the time-series relationship between housing prices in eight Southern California metropolitan statistical areas (MSAs). First, we perform cointegration tests of the housing price indexes for the MSAs, finding seven cointegrating vectors. Thus, the evidence suggests that one common trend links the housing prices in these eight MSAs, a purchasing power parity finding for the housing prices in Southern California. Second, we perform temporal Granger causality tests revealing intertwined temporal relationships. The Santa Anna MSA leads the pack in temporally causing housing prices in six of the other seven MSAs, excluding only the San Luis Obispo MSA. The Oxnard MSA experienced the largest number of temporal effects from other MSAs, six of the seven, excluding only Los Angeles. The Santa Barbara MSA proved the most isolated in that it temporally caused housing prices in only two other MSAs (Los Angels and Oxnard) and housing prices in the Santa Anna MSA temporally caused prices in Santa Barbara. Third, we calculate out-of-sample forecasts in each MSA, using various vector autoregressive (VAR) and vector error-correction (VEC) models, as well as Bayesian, spatial, and causality versions of these models with various priors. Different specifications provide superior forecasts in the different MSAs. Finally, we consider the ability of theses time-series models to provide accurate out-of-sample predictions of turning points in housing prices that occurred in 2006:Q4. Recursive forecasts, where the sample is updated each quarter, provide reasonably good forecasts of turning points.
    Keywords: Housing prices, Forecasting
    JEL: C32 R31
    Date: 2009–02
  6. By: Francesco Aiello (University of Calabria); Alfonsina Iona (Aston University); Leone Leonida (Queen Mary, University of London)
    Abstract: We model the channels through which public expenditure on infrastructure influences firm value and shapes its investment decisions via both adjustment costs and marginal profitability of capital. We test these hypotheses by using a large panel of Italian firms. Empirical results show that infrastructure interacts with revenues and costs in shaping firm's profitability of capital and influences its adjustment costs. Finally we find that infrastructure expenditure contributes to reduce the economic gap between the North and the South of Italy. These effects vary across regions and sectors.
    Keywords: Regional infrastructure, Firm's value, Corporate investment
    JEL: D21 D62 D92
    Date: 2009–03
  7. By: Chen, George Shih-Ku
    Abstract: We investigate the impact of agglomeration economies on the distribution of Taiwanese investment in China for the period 1996-2005. We find that the uneven distribution of Taiwanese investment can be explained by agglomeration economies related to industrial linkages, labour-market pooling and monitoring costs. Furthermore, we find evidence that the nature of agglomeration forces attracting Taiwanese investment not only differs across regions but also changes over time. Importantly, we find mild evidence that this investment is affected by a market crowding effect, or that the benefit from agglomeration decreases once the market size exceeds a critical threshold.
    Keywords: Agglomeration economies; China; Taiwanese investment
    JEL: F23
    Date: 2009–01–05
  8. By: Kanaka D. Shetty; Thomas DeLeire; Chapin White; Jayanta Bhattacharya
    Abstract: U.S. state and local governments are increasingly restricting smoking in public places. This paper analyzes nationally representative databases, including the Nationwide Inpatient Sample, to compare short-term changes in mortality and hospitalization rates in smoking-restricted regions with control regions. In contrast with smaller regional studies, we find that workplace bans are not associated with statistically significant short-term declines in mortality or hospital admissions for myocardial infarction or other diseases. An analysis simulating smaller studies using subsamples reveals that large short-term increases in myocardial infarction incidence following a workplace ban are as common as the large decreases reported in the published literature.
    JEL: I1 I18
    Date: 2009–03
  9. By: Angel de la Fuente
    Abstract: Tras un breve repaso de la experiencia internacional, en el presente trabajo se cuantifica la contribución de la inversión en las nuevas tecnologías de la información y las comunicaciones (TICs) al crecimiento de España y sus regiones y a las disparidades de productividad entre estas últimas. Con este fin se estima una función de producción regional desagregando la dotación de capital en un componente TIC y otro no TIC. Una comparación de los resultados con los obtenidos a partir de la metodología habitual de contabilidad del crecimiento sugiere que la inversión en bienes TIC podría generar efectos indirectos internos y externos muy considerables.
    Date: 2008–09–30
  10. By: Darko Tipurić (Faculty of Economics and Business, University of Zagreb); Mirjana Pejić Bach (Faculty of Economics and Business, University of Zagreb)
    Abstract: The aim of this paper is to obtain a better understanding of differences and dynamics of concentration across various industries in the Croatian economy in the period 1995-2006 in order to be able to foresee future trends. Shifts in concentration vary across industries in the Croatian economy. Concentration declines in approximately two fifths of the Croatian economy whereas one fifth of the Croatian economy shows a growing trend in concentration. In the remaining industries no changes in concentration occurred. The causes of concentration are as follows: (1) decline in concentration due to inadequate adjustments of leading firms to transition, (2) decline in concentration due to deregulation, (3) increase in concentration in industries targeted by multinational companies, and (4) increase in concentration in industries in which no significant new firms emerged following the unsuccessful privatization of leading firms.
    Keywords: concentration, industry, transition
    JEL: L12 L13 L16
    Date: 2009–02–22
  11. By: Luca Andriani; Dimitrios Karyampas (School of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: In the last 20 years, social capital, has been evoked in several field of social science research and used to explain a vast range of phenomena: political participation, institution performance, corruption, economic success of countries and so on. Unfortunately, dealing with social capital at a scientific level presents, at least, three main problems. First social capital’s definition is still elusive, especially due to its multi-dimensional nature. Second, it is a particular form of capital related to a very high level of intangibility. Finally, because of lack of suitable data there is neither a universal measurement method, nor a single underlined indicator commonly accepted by the literature. These are some of the reasons for which social capital measures are considered as proxies. By using the density of workers within industrial districts, we have constructed an alternative proxy to those that already exist in the literature in order to empirically analyse the difference, in terms of economic performance, across the Italian regions. The methodology we have applied to derive the index is identical to that one used to construct the Putnam’s instrument. Empirical evidence shows that our measure does not affect macroeconomic indicators such as investment and income per capita. However, it significantly influences unemployment disparities, and the level of innovation.
    Date: 2009–01

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