nep-geo New Economics Papers
on Economic Geography
Issue of 2010‒01‒23
twelve papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Institutions and geography: Empirical test of spatial growth models for European regions By Giuseppe Arbia; Michele Battisti; Gianfranco Di Vaio
  2. Is Agglomeration really good for Growth? Global Efficiency and Interregional Equity By Fabio Cerina; F. Mureddu
  3. They arrive with new information. Tourism flows and production efficiency in the European regions By Emanuela Marrocu; Raffaele Paci
  4. Dynamic Panel Data Models Featuring Endogenous Interaction and Spatially Correlated Errors By Jan P.A.M. Jacobs; Jenny E. Ligthart; Hendrik Vrijburg
  5. Spatial and Temporal Diffusion of House Prices in the UK By Holly, S.; Pesaran, M.H.; Yamagata, T.
  6. Local Export Spillovers in France By Pamina Koenig; Florian Mayneris; Sandra Poncet
  7. The Economic Contribution of the Minnesota Valley Regional Rail Authority Rail Line By Tuck, Brigid; Linscheid, Neil; Dolan, Tim; Nelson, David
  8. Do institutions matter for regional development? By Andrés Rodríguez-Pose
  9. Determinants of Health Disparities in Italian Regions By Luisa Franzini; Margherita Giannoni
  10. Product variety, price elasticity of demand and fixed cost in spatial models By Gu, Yiquan; Wenzel, Tobias
  11. Responsibility for regional waste generation: A single region extended input-output analysis with uni-directional trade flows By Christa D. Jensen; Stuart McIntyre; Max Munday; Karen Turner
  12. Testing, not modelling, the impact of Cohesion support: a theoretical framework and some preliminary results for the Spanish regions By Angel de la Fuene

  1. By: Giuseppe Arbia; Michele Battisti; Gianfranco Di Vaio
    Abstract: This article provides an empirical assessment of the growth experiences of European regions, during the period 1991-2004, by taking into account the spatial effects due to both institutions and geography. These effects have been modeled by means of specific controls and by using a non-conventional spatial weight matrix. Results favour a model dealing with substantive spatial externalities. Within this framework, the country-specific institutions are strongly and positively related to the regional productivity’s growth rate. In addition, the geo-institutional proximity increases the spatial dependence of the regional output per worker and raises the speed of convergence. By contrast, the pure geographical metrics is underperforming, while underestimating the convergence dynamics.
    Keywords: Regional growth, income convergence, institutions, geography, spatial effects.
    JEL: C21 O40 R11
    Date: 2009–11–15
  2. By: Fabio Cerina; F. Mureddu
    Abstract: We propose a New Economic Geography and Growth (NEGG) model able to reconcile theory with empirical evidence and current regional policy rules. By extending Baldwin et al. (2001) with an additional non-tradable services sector which benefits from localized intersectoral knowledge spillovers coming from the industrial sector, we show that aggregate growth and interregional equity do not necessarily conflict. In particular, we show that an equal distribution of industrial activities among regions is good for aggregate real growth when: 1) the importance of services in agents’ preferences 2) the spatial range of localized intertemporal knowledge spillovers and 3) the intensity of localized intersectoral knowledge are all large enough. Unlike other NEGG works, these results are consistent with the empirical evidence according to which the trade-off between aggregate growth and interregional equity loses relevance in more advanced stages of development. Moreover, our model provides a theoretical basis to EU and US regional policies which favour dispersion of industrial activities. Finally, an important by-product of our model is that we show that regional growth rates of real income always diverge when agglomeration takes place, being lower in the periphery. These results have strong policy implications as they suggest that concentrating industrial activities in only one region may be welfare – harming for both the less industrialized region and at the aggregate level.
    Keywords: Economic geography; efficiency-equity trade-off; intersectoral localized knowledge spillovers; non tradables; growth.
    JEL: O33 O41 R10
    Date: 2009
  3. By: Emanuela Marrocu; Raffaele Paci
    Abstract: <p>It is well known that firms productivity is influenced by information spillovers generated either by other firms located nearby or by direct contacts with final demand or by foreign demand in the case of traded products. In this paper we investigate a new channel of efficiency - enhancing information spillovers: tourism flows. The idea is that tourists, in general, have preferences for high quality goods and differentiated products which are revealed when they buy local products in the tourism destinations, thus transmitting relevant information to the local firms. The latter, in turn, exploit this new information generating a positive impact on the efficiency level of the local economy. More specifically we examine the effects of tourist flows on regional total factor productivity, within a spatial dynamic model, controlling also for other intangible factors (such as human, social and technological capital) and for the degree of accessibility. We apply the analysis to 199 European regions belonging to the EU15 member countries, plus Switzerland and Norway. The econometric results show the positive impact of tourism flows on regional efficiency levels together with the positive role played by intangible assets, infrastructures and spatial spillovers.</p>
    Keywords: tourism, information; total factor productivity; European regions
    JEL: R10 O33 L83 D83
    Date: 2009
  4. By: Jan P.A.M. Jacobs (University of Groningen, CAMA and CIRANO); Jenny E. Ligthart (International Studies Program. Andrew Young School of Policy Studies, Georgia State University); Hendrik Vrijburg (Erasmus University Rotterdam)
    Abstract: We extend the three-step generalized methods of moments (GMM) approach of Kapoor, Kelejian, and Prucha (2007), which corrects for spatially correlated errors in static panel data models, by introducing a spatial lag and a one-period lag of the dependent variable as additional explanatory variables. Combining the extended Kapoor, Kelejian, and Prucha (2007) approach with the dynamic panel data model GMM estimators of Arellano and Bond (1991) and Blundell and Bond (1998) and supplementing the dynamic instruments by lagged and weighted exogenous variables as suggested by Kelejian and Robinson (1993) yields new spatial dynamic panel data estimators. The performance of these spatial dynamic panel data estimators is in- vestigated by means of Monte Carlo simulations. We show that dierences in bias as well as root mean squared error between spatial GMM estimates and corresponding GMM estimates in which spatial error correlation is ignored are small.
    Keywords: Dynamic panel models, spatial lag, spatial error, GMM estimation
    Date: 2009–12–01
  5. By: Holly, S.; Pesaran, M.H.; Yamagata, T.
    Abstract: This paper provides a method for the analysis of the spatial and temporal diffusion of shocks in a dynamic system. We use changes in real house prices within the UK economy at the level of regions to illustrate its use. Adjustment to shocks involves both a region specific and a spatial effect. Shocks to a dominant region - London - are propagated contemporaneously and spatially to other regions. They in turn impact on other regions with a delay. We allow for lagged effects to echo back to the dominant region. London in turn is influenced by international developments through its link to New York and other financial centers. It is shown that New York house prices have a direct effect on London house prices. We analyse the effect of shocks using generalised spatio-temporal impulse responses. These highlight the di¤usion of shocks both over time (as with the conventional impulse responses) and over space.
    Keywords: House Prices, Cross Sectional Dependence, Spatial Dependence
    JEL: C21 C23
    Date: 2009–12–16
  6. By: Pamina Koenig; Florian Mayneris; Sandra Poncet
    Abstract: This paper investigates the presence of local export spillovers on both the extensive (the decision to start exporting) and the intensive (the export volume) margins of trade, using data on French individual export flows, at the product-level and by destination country, between 1998 and 2003. We investigate whether the individual decision to start exporting and exported volume are influenced by the presence of nearby product and/or destination specific exporters, using a gravity-type equation estimated at the firmlevel. Spillovers are considered at a fine geographical level corresponding to employment areas (348 in France). We control for the new economic geography-type selection of firms into agglomerated areas, and for the local price effects of firms agglomeration. Results show evidence of the presence of export spillovers on the export decision but not on the exported volume. We interpret this as a first evidence of export spillovers acting through the fixed rather than the variable cost. Spillovers on the decision to start exporting are stronger when specific, by product and destination, and are not significant when considered on all products-all destinations. Moreover, export spillovers exhibit a spatial decay within France: the effect of other exporting firms on the export decision is stronger within employment areas and declines with distance.
    Keywords: Firm-level export data; product and destination specific spillovers; agglomeration
    JEL: F1 R12 L25
    Date: 2009–09
  7. By: Tuck, Brigid; Linscheid, Neil; Dolan, Tim; Nelson, David
    Keywords: Community/Rural/Urban Development,
    Date: 2010–01
  8. By: Andrés Rodríguez-Pose (IMDEA Ciencias Sociales)
    Abstract: This paper discusses whether institutions matter for regional development and how to integrate them in regional development strategies. It finds that while institutions are crucial for economic development, generating an institution-based regional development strategy is likely to be undermined by the lack of definition of what are adequate, solid, and efficient institutions. Problems related to the measurement of institutions, to their space and time variability, to the difficulties in establishing the right mix of formal and informal institutions, and to the endogeneity between institutions and economic development make one-size-fits-all approaches to operationalizing institutions difficult. Development strategies specifically tailored to the conditions of different regional institutional environments across regions may yield greater returns.
    Date: 2010–01–11
  9. By: Luisa Franzini; Margherita Giannoni
    Abstract: There is an extensive literature on regional disparities in health, but much of thisliterature focuses on the United States. Among European countries, Italy is the country whereregional health disparities contribute the most to socioeconomic health disparities. In this paper,we report on regional differences in self-reported poor health and explore possible determinantsat the individual and regional levels in Italy. We use data from the “Indagine Multiscopo sulle Famiglie”, a survey of aspects ofeveryday life in the Italian population, to estimate multilevel logistic regressions that model poorself-reported health as a function of individual and regional socioeconomic factors. Next we usethe causal step approach to test if living conditions, healthcare characteristics, social isolation,2and health behaviors at the regional level mediate the relationship between regionalsocioeconomic factors and self-rated health. We find that residents living in regions with more poverty, more unemployment, andmore income inequality are more likely to report poor health and that poor living conditions andprivate share of healthcare expenditures at the regional level are determinants of socioeconomicdisparities in self-rated health among Italian regions. The implications are that regional contexts matter and that regional policies in Italyhave the potential to reduce health disparities by implementing interventions aimed at improvingliving conditions and access to quality healthcare.
    Keywords: health inequality, Italy, self-reported health, regional health disparities
    JEL: I10 I12 D10
    Date: 2009–10–20
  10. By: Gu, Yiquan; Wenzel, Tobias
    Abstract: This paper explores the implications of price-dependent demand in spatial models of product differentiation. We introduce consumers with a quasi-linear utility function in the framework of the Salop (1979) model. We show that the so-called excess entry theorem relies critically on the assumption of completely inelastic demand. Our model is able to produce excessive, insufficient, or optimal product variety. A proof for the existence and uniqueness of symmetric equilibrium when price elasticity of demand is increasing in price is also provided. --
    Keywords: Demand elasticity,Spatial models,Excess entry theorem
    JEL: L11 L13
    Date: 2009
  11. By: Christa D. Jensen (Regional Research Institute, Department of Economics, West Virginia University); Stuart McIntyre (Department of Economics, University of Strathclyde); Max Munday (Welsh Economy Research Unit, Member of ESRC Centre for Business Relationships, Accountability, Sustainability and Society (BRASS), Cardiff University); Karen Turner (Department of Economics, University of Strathclyde)
    Abstract: The paper uses a regional input-output (IO) framework and data derived on waste generation by industry to examine regional accountability for waste generation. In addition to estimating a series of industry output-waste coefficients, the paper considers two methods for waste attribution but focuses first on one (trade endogenised linear attribution system (TELAS)) that permits a greater focus on private and public final consumption as the main exogenous driver of waste generation. Second, the paper uses a domestic technology assumption (DTA) to consider a regional ‘waste footprint’ where local consumption requirements are assumed to be met through domestic production.
    Keywords: waste attribution; regional economy; input-output analysis; Wales
    JEL: C67 Q01 Q53 R15
    Date: 2009–11
  12. By: Angel de la Fuene
    Abstract: This paper develops a simple model that can be used to estimate the effectiveness of Cohesion expenditure relative to similar but unsubsidized projects, thereby making it possible to explicitly test an important assumption that is often implicit in estimates of the impact of Cohesion policies. Some preliminary results are reported for the case of infrastructure investment in the Spanish regions.
    Keywords: Cohesion policy effectiveness, Structural Fund evaluation
    JEL: R58 H54
    Date: 2010–01–12

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