nep-geo New Economics Papers
on Economic Geography
Issue of 2010‒07‒31
five papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. The Phantom of the Opera: Cultural Amenities, Human Capital, and Regional Economic Growth By Falck, Oliver; Fritsch, Michael; Heblich, Stephan
  2. Testing Nonlinear New Economic Geography Models By Bode, Eckhardt; Mutl, Jan
  3. How polycentric is a monocentric city? The role of agglomeration economies By Ahlfeldt, Gabriel M.; Wendland, Nicolai
  4. Measuring Regional Inequality by Internet Car Price Advertisements: Evidence for Germany By Konstantin A. Kholodilin; Boriss Siliverstovs
  5. Capital Transfers and Equalization: An Application to Spanish Regions By Ana Herrero-Alcalde; Jorge Martinez-Vazquez; Encarnación Murillo-García

  1. By: Falck, Oliver (Ifo Institute for Economic Research); Fritsch, Michael (University of Jena); Heblich, Stephan (Max Planck Institute for Economics)
    Abstract: We analyze the extent to which endogenous cultural amenities affect the spatial equilibrium share of high-human-capital employees. To overcome endogeneity, we draw on a quasi-natural experiment in German history and exploit the exogenous spatial distribution of baroque opera houses built as a part of rulers' competition for prestigious cultural amenities. Robustness tests confirm our strategy and strengthen the finding that proximity to a baroque opera house significantly affects the spatial equilibrium share of high-human-capital employees. Then, a cross-region growth regression shows that these employees induce local knowledge spillovers and shift a location to a higher growth path.
    Keywords: cultural amenities, regional economic growth, human capital, Bohemians
    JEL: H41 R11 J24
    Date: 2010–07
  2. By: Bode, Eckhardt (Kiel Institute for the World Economy, Kiel, Germany); Mutl, Jan (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: We test a New Economic Geography (NEG) model for U.S. counties, employing a new strategy that allows us to bring the full NEG model to the data, and to assess selected elements of this model separately. We find no empirical support for the full NEG model. Regional wages in the U.S. do not respond to local wage shocks in the way predicted by the model. We show that the main reason for this is that the model does not predict either the migration patterns induced by local wage shocks or the repercussions of this migration for regional wages correctly.
    Keywords: New economic geography, spatial econometrics
    JEL: C21 C51 R12
    Date: 2010–07
  3. By: Ahlfeldt, Gabriel M.; Wendland, Nicolai
    Abstract: Can the demise of the monocentric economy across cities during the 20th century be explained by decreasing transport costs to the city center or are other fundamental forces at work? Taking a hybrid perspective of classical bid-rent theory and a world where clustering of economic activity is driven by (knowledge) spillovers, Berlin, Germany, from 1890 to 1936 serves as a case in point. We assess the extent to which firms in an environment of decreasing transport costs and industrial transformation face a trade-off between distance to the CBD and land rents and how agglomeration economies come into play in shaping their location decisions. Our results suggest that an observable flattening of the traditional distance to the CBD gradient may mask the emergence of significant agglomeration economies, especially within predominantly service-based inner city districts.
    Keywords: Transport Innovations; Land Values; Location Productivity; Agglomeration Economies; Economic History; Berlin
    JEL: N9 N7 R33 O12
    Date: 2010–07
  4. By: Konstantin A. Kholodilin; Boriss Siliverstovs
    Abstract: We suggest to use Internet car sale price advertisements for measuring economic inequality between and within German regions. Our estimates of regional income levels and Gini indices based on advertisements are highly, positively correlated with the official figures. This implies that the observed car prices can serve as a reasonably good proxy for income levels. In contrast to the traditional measures, our data can be fast and inexpensively retrieved from the web, and more importantly allow to estimate Gini indices at the NUTS2 level-something that never has been done before. Our approach to measuring regional inequality is a useful alternative source of information that could complement officially available measures.
    Keywords: Car price advertisements, economic inequality, German NUTS1 and NUTS regions, Gini index, Internet
    JEL: C21 O47 R11
    Date: 2010
  5. By: Ana Herrero-Alcalde (Departamento de Economía Aplicada y Gestión Pública, Universidad Nacional de Educación a Distancia); Jorge Martinez-Vazquez (International Studies Program. Andrew Young School of Policy Studies, Georgia State University); Encarnación Murillo-García (Universidad Rey Juan Carlos)
    Abstract: This paper analyzes the main design issues for utilizing capital transfers with an equalization objective within a system of sub-national finance. Although there is a vast literature and ample policy practice with the design of equalization grants involving needs for recurrent expenditures and/or fiscal capacity associated with current revenues, there is a dearth at the theoretical design and actual practice levels for how to use capital transfers with an interregional equalization objective. This is an area of fiscal federalism that has not been studied in depth. The aims of this paper are to identify the singular characteristics of capital expenditures and capital financing sources which allow us to quantify both needs and capacity to finance capital infrastructure and incorporate them in a capital equalization transfer formula. The theoretical design is applied to the Spanish regional level of government to reveal its advantages and shortcomings.
    Keywords: capital transfers, equalization, fiscal decentralization design
    Date: 2010–07–23

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