nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒10‒31
ten papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Bohemians, human capital and regional economic growth By Oliver Falck; Michael Fritsch; Stephan Heblich
  2. Spatial implications of international trade under the new economic geography approach By Ramírez Grajeda, Mauricio; de León Arias, Adrián
  3. Trade openness and city interaction By Ramírez Grajeda, Mauricio; Sheldon, Ian
  4. The local effects of monetary policy By Neville Francis; Michael T. Owyang; Tatevik Sekhposyan
  5. Wage distribution and the spatial sorting of workers and firms By Alessia Matano; Paolo Naticchioni
  6. Breakthrough Inventions and Migrating Clusters of Innovation By William R. Kerr
  7. Improving the ACCRA U.S. regional cost of living index By Keith R. Phillips; Christina Daly
  8. Regional Sources of Growth Acceleration in India By Ravindra H. Dholakia
  9. UN’ANALISI DEI FLUSSI FINANZIARI DELLA REGIONE SICILIA By Greco, Maria Giuseppina; Torrisi, Gianpiero
  10. Technological Externalities and Economic Distance: A case of the Japanese automobile suppliers By TAKEDA Yosuke; UCHIDA Ichiro

  1. By: Oliver Falck (Ifo Institute for Economic Research); Michael Fritsch (University of Jena); Stephan Heblich (Max Planck Institute of Economics, Entrepreneurship, Growth, and Public Policy)
    Abstract: An emerging literature on the geography of bohemians argues that a region’s lifestyle and cultural amenities explain, at least partly, the unequal distribution of highly qualified people across space, which in turn, explains geographic disparities in economic growth. However, to date, there has been little or no empirical attempt to identify a causal relation. To identify the causal impact of bohemians on economic growth, we apply an instrumental variable approach using as an exogenous instrument the geographic distribution of bohemians prior to the Industrial Revolution in Germany. This distribution was primary the result of competition for prestige between courts and not of economic prosperity. Accordingly, the instrument is independent of today’s regional economic development. Focusing on the concentration of highly skilled people today that is explained by the proximity to exogenous concentrations of bohemians, the observed local average treatment effect supports the hypothesis of a positive impact of bohemians on regional economic development.
    Keywords: Regional Growth, Human Capital, Bohemians, Instrumental Variables
    JEL: R11 J24 C31
    Date: 2009
  2. By: Ramírez Grajeda, Mauricio; de León Arias, Adrián
    Abstract: In 2008, Paul Krugman from Princeton University was awarded the Nobel Prize in Economic Sciences by the Central Bank of Sweden, for his “analysis of trade patterns and location of economic activity”. In this paper we survey the literature, known as the New Economic Geography (NEG), launched by Krugman (1991). In particular, we focus on four topics: (i) NEG roots, (ii) NEG rationale; (ii) the spatial impact of international trade on global economic imbalances; and (iv) the impact of international trade on urban structure.
    Keywords: New Economic Geography; Trade Openness; Agglomeration and Urban Economics.
    JEL: F15 F12 R12
    Date: 2009–10–01
  3. By: Ramírez Grajeda, Mauricio; Sheldon, Ian
    Abstract: The New Economic Geography framework supports the idea that economic integration plays an important role in explaining urban concentration. By using Fujita et al. (1999) as a theoretical motivation, and information on the 5 most important cities of 84 countries, we find that the size of main cities declines and the size of secondary cities increases as a result of external trade. Similar results are obtained for cities with a population over a million. However, cities with a large fraction of the urban population grow independently of their position in the urban ranking. The implications for urban planners and development economists is that investment in infrastructure must take place in secondary cities when a country is involved in a process of trade liberalization, especially, those located near ports.
    Keywords: New Economic Geography; Trade Openness; Agglomeration and Urban Economics.
    JEL: F15 F12 R12
    Date: 2009–05–01
  4. By: Neville Francis; Michael T. Owyang; Tatevik Sekhposyan
    Abstract: Previous studies have documented disparities in the regional responses to monetary policy shocks; this variation has been found to depend, in part, on differences in the industrial composition of the regional economies. However, because of computational issues, the literature has often neglected the richest level of disaggregation: the city. In this paper, we estimate the city-level responses to monetary policy shocks in a Bayesian VAR. The Bayesian VAR allows us to model the entire panel of metropolitan areas through the imposition of a shrinkage prior. We then seek the origin of the city-level asymmetric responses.
    Keywords: Vector autoregression ; Econometric models
    Date: 2009
  5. By: Alessia Matano; Paolo Naticchioni (Dipartimento di Economia, Sapienza University of Rome Italy)
    Abstract: Spatial sorting plays an important role in accounting for disparities in average wages among locations. This paper shows that sorting also matters when addressing the relation between spatial externalities and wage distribution, i.e. across workers located at dierent percentiles of the wage distribution. Using Italian employer-employee panel data we can control for individual and firm heterogeneity as well as for unobserved individual heterogeneity by means of quantile fixed eects estimates. After controlling for the sorting of workers the spatial externality impacts dampen along the whole wage distribution and generally remain positive only in the upper tail. As for firm sorting, it becomes uniform along the wage distribution once individual fixed effects are considered. We also point out that the impact of worker sorting is not homogeneous across sectors: along the density dimension it occurs mainly in skill-intensive sectors, while along the specialization dimension it is concentrated in the unskill-intensive sectors.
    Keywords: Spatial Externalities, Spatial Sorting, Wage Distribution, Quantile Fixed Effects
    JEL: J31 J61 R23 R30
    Date: 2009
  6. By: William R. Kerr
    Abstract: We investigate the speed at which clusters of invention for a technology migrate spatially following breakthrough inventions. We identify breakthrough inventions as the top one percent of US inventions for a technology during 1975-1984 in terms of subsequent citations. Patenting growth is significantly higher in cities and technologies where breakthrough inventions occur after 1984 relative to peer locations that do not experience breakthrough inventions. This growth differential in turn depends on the mobility of the technology's labor force, which we model through the extent that technologies depend upon immigrant scientists and engineers. Spatial adjustments are faster for technologies that depend heavily on immigrant inventors. The results qualitatively confirm the mechanism of industry migration proposed in models like Duranton (2007).
    JEL: F2 J4 J6 O3 O4 R1 R3
    Date: 2009–10
  7. By: Keith R. Phillips; Christina Daly
    Abstract: The broadest and most commonly used measure of the cost of living across U.S. cities is the American Chamber of Commerce Research Association (ACCRA) index. This index is used by business and government organizations and the media to to rank living standards and real wages across U.S. cities. In this study we reduce the aggregation bias in the index by calculating national average prices for the 59 item prices using population weights instead of the equal weight formula used by ACCRA. This correction results in a decline in the index values for all cities and changes in the rankings and bi-variate comparisons between city pairs. In some high-cost cities the index values decrease by over 25 percent, and in 74 percent of the cities the rank changes by greater than one spot.
    Keywords: Cost and standard of living ; Wages ; Prices
    Date: 2009
  8. By: Ravindra H. Dholakia
    Abstract: Gujarat, West Bengal, Karnataka, Maharashtra, Kerala and Tamil Nadu were the major contributors to the growth acceleration in India after 1991-92. Although the Regional Disparity may increase temporarily, causality test provides support to the hypothesis about spread effects. The Regional growth targets assigned by the 11th Plan in India seem to rely on the spread effects of economic growth acceleration in the better off states to achieve its 9 percent growth target and reduce regional disparity in the long run. To strengthen spread effects, the domestic economy should be further integrated and interlinked with free flow of goods, services and factors of production.
    Date: 2009–03–16
  9. By: Greco, Maria Giuseppina; Torrisi, Gianpiero
    Abstract: The paper presents an analysis of (Italian region) Sicilia’s financial flows using data from Regional Public Accounts. The paper is divided into two main parts. The first part of the work considers financial flows as a whole. The second part considers more in detail expenditure and revenue both in current and in capital account. The analysis shows that Sicilian regional data are characterised by similarities as well as peculiar aspects with respect both to national aggregate and the Southern one.
    Keywords: Conti Pubblici Territoriali; Spesa Pubblica; Entrate Pubbliche.
    JEL: E62 E66 E60
    Date: 2009
  10. By: TAKEDA Yosuke; UCHIDA Ichiro
    Abstract: This paper is in the spirit of Marshall (1920), who raised the question of how economic distance affects a firm's productivity, focusing upon the role of idea sharing in relation to technological knowledge or information between firms. In order to quantify the degree of knowledge spillover or information sharing, we take the production function approach. Assuming core-periphery structure around automobile assemblies surrounded with auto-parts suppliers, we estimate plant-level production functions of the Japanese auto-parts suppliers, where productivity function depends upon the degree of information sharing measured by both geographic plant location and membership of technological cooperation associations. We take econometric issues of cross-sectional dependence of productivity and a simultaneity problem between inputs, applying methods to the standard OLS and GMM estimators. Positive technological externalities are seen in general and for independent plants, the fact which is robust to specifications of the production functions. Agglomeration effects are however rarely observed for relation-specific or cooperative plants. Some of them cost substantial negative externalities. Once a simultaneity problem is econometrically considered, instead of increasing returns, decreasing returns to scale emerge in cases of total materials. Agglomeration, if any, could be brought about not by increasing returns to scale, but by productivity spillover among suppliers proximate to automobile assemblies.
    Date: 2009–10

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