nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒03‒01
nine papers chosen by
Andreas Koch
Institute for Applied Economic Research

  2. Regional determinants of German FDI in the Czech Republic : evidence from a gravity model approach By Schäffler, Johannes; Hecht, Veronika; Moritz, Michael
  3. Industry Concentration, Knowledge Diffusion, and Economic Growth Without Scale Effects By Colin Davis; Ken-ichi Hashimoto
  4. Driving to Opportunity: Local Rents, Wages, Commuting Costs and Sub-Metropolitan Quality of Life By David Albouy; Bert Lue
  5. Determinants of urban sprawl in European cities By Walid Oueslati; Seraphim Alvanides; Guy Garrod
  6. Empirical Polycentricity: The Complex Relationship Between Employment Centers By Steven Craig; Janet Kohlhase; Adam Perdue
  7. An Application of Principal Component Analysis on Multivariate Time-Stationary Spatio-Temporal Data By Wolfgang Karl Härdle; Helmut Thome; ;
  8. Spatial price equilibrium and the transport sector : a trade-consistent SCGE model By Ando, Asao; Meng, Bo
  9. Gravity and Extended Gravity: Using Moment Inequalities to Estimate a Model of Export Entry By Eduardo Morales; Gloria Sheu; Andrés Zahler

  1. By: Antoine Gervais; J. Bradford Jensen
    Abstract: We develop a methodology for estimating the “tradability” of goods and services using data on U.S. establishments. Our results show that the average service industry is less tradable than the average manufacturing industry. However, there is considerable within-sector variation in estimated tradability and many service industries are as tradable as manufacturing. Tradable service industries account for a significant share of economic activity and workers employed in those industries have relatively high average wages. Counterfactual analysis indicates that the potential welfare gains from policy liberalization in service trade are of the same order of magnitude as liberalization in the manufacturing sector.
    Keywords: Service sector, international trade, imperfect competition, microdata, trade liberalization.
    JEL: F1
    Date: 2014–03
  2. By: Schäffler, Johannes (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Hecht, Veronika (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Moritz, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: The attractiveness for the location of multinational firms is seen as a crucial issue for the development and prosperity of regions. This article focuses on a two-country relationship and deals with the regional distribution of German multinational firms and their affiliates in the Czech Republic. A new dataset established by the IAB covers information on the basic population of cross-border foreign direct investment (FDI) projects, thereby exceeding the number of observations in previously used databases by far. On the basis of 3,894 FDI projects the regional determinants of German cross-border investments in the Czech Republic are analysed for both the home and the host country. Alternative specifications of the gravity model are used in order to investigate the regional distribution of common investment projects that are calculated as a combination of a headquarters in a German spatial planning region and an affiliate in a Czech NUTS 3 region. Concerning the explanatory variables a distinction is made between three groups of factors: first, market size and agglomeration features of the regions; second, attributes representing the distance between the headquarters in Germany and the affiliates in the Czech Republic; and third, regional labour market characteristics. While the findings are generally in line with theoretical expectations, differences emerge between manufacturing FDI and services FDI.
    JEL: F23 R12 F15
    Date: 2014–02–24
  3. By: Colin Davis (The Institute for Liberal Arts, Doshisha University); Ken-ichi Hashimoto (Graduate School of Economics, Kobe University)
    Abstract: This paper develops a two region model of trade to study the relationship between geographic patterns of industry and economic growth without scale effects. With transport costs, imperfect knowledge diffusion, and perfect capital mobility, firms locate production, process innovation, and product development independently in their lowest cost regions, leading to the partial concentration of production and the full agglomeration of innovation in the region with the largest market. A rise in industry concentration increases knowledge spillovers from production to innovation, resulting in a fall or a rise in the level of market entry depending on whether productivity increases more for process innovation or for product development. As a result, the rate of economic growth may rise or fall, depending on the effects of industry concentration on market entry.
    Keywords: Industry Concentration, Industry Share, Knowledge Diffusion, Productivity Growth, Scale Effect
    JEL: F43 O30 O40 R12
    Date: 2014–02
  4. By: David Albouy; Bert Lue
    Abstract: In an equilibrium model of residential and workplace choice, we estimate local willingness-to-pay measures for 2071 areas covering the United States. These measures are based on how high residential housing and commuting costs are relative to workplace wages; they index quality of life when preferences are sufficiently homogeneous. Wage levels vary little within metropolitan areas relative to across them, while individual characteristics that predict wages vary more within, suggesting patterns about sorting. Quality of life varies as much within metros as across them, and is typically high in areas that are dense, suburban, mild, safe, entertaining, and have higher school-funding.
    JEL: H73 Q51 R21 R23 R41
    Date: 2014–02
  5. By: Walid Oueslati (Granem - Groupe de Recherche ANgevin en Economie et Management - Agrocampus Ouest - Institut national de la recherche agronomique (INRA) : UMR49); Seraphim Alvanides (Geography and Built Environment - University of Northumbira); Guy Garrod (CRE - Centre for Rural Economy - University of Newcastle, Newcastle upon Tyne, UK)
    Abstract: This paper provides empirical evidence that helps to answer several key questions relating to the extent and causes of urban sprawl in Europe. Building on the monocentric city model, this study uses existing data sources to derive a set of panel data for 282 European cities at three time points (1990, 2000 and 2006). Two indices of urban sprawl are calculated and respectively reflect changes in artificial area and the levels of urban fragementation for each city. These are supplemented by a set of data on various economic and geographical variables that might explain the variation of these indices. Estimating using a Hausman Taylor and random regressors to control the possible correlation between explanatory variables and unobservable city-level effects, we find that the fundamental conclusions of the standard monocentric model are valid in the European context for both indices. Although the variables generated by the monocentric model explain a large part of variation of artificial area, their explanatory power for the fragmentation is relatively low.
    Keywords: Urban sprawl, European cities, spatial scale, monocentric city model, urban scattering.
    Date: 2014–01–06
  6. By: Steven Craig (University of Houston); Janet Kohlhase (University of Houston); Adam Perdue (University of Houston)
    Abstract: This paper empirically finds that employment subcenters have the expected connections with the central business district, but additionally have important relationships with each other. Using data from Houston, Texas, USA, we use a new proximity measure to estimate a polycentric density function, and show that the estimated gradient using the total derivative, allowing for the relationship between all subcenters, is much different than the gradient using only the own center coefficients. Further, we model asymmetry in the density function by limiting the employment center influence using commuting data, and testing the influence of over-lapping areas for both population and employment. We find significant asymmetry both within, and even outside of the commuting areas. We conclude that subcenters have important linkages to each other in addition to the CBD, and that therefore the polycentric city is more complex than additional centers mimicking the CBD.
    Keywords: Polycentric City; Employment Subcenters, population density; employment density
    JEL: R11 R14 R30
    Date: 2014–02–24
  7. By: Wolfgang Karl Härdle; Helmut Thome; ;
    Abstract: Principal component analysis denotes a popular algorithmic technique to dimension reduction and factor extraction. Spatial variants have been proposed to account for the particularities of spatial data, namely spatial heterogeneity and spatial autocorrelation, and we present a novel approach which transfers principal component analysis into the spatio-temporal realm. Our approach, named stPCA, allows for dimension reduction in the attribute space while striving to preserve much of the data's variance and maintaining the data's original structure in the spatio-temporal domain. Additionally to spatial autocorrelation stPCA exploits any serial correlation present in the data and consequently takes advantage of all particular features of spatial-temporal data. A simulation study underlines the superior performance of stPCA if compared to the original PCA or its spatial variants and an application on indicators of economic deprivation and urbanism demonstrates its suitability for practical use.
    Keywords: PCA, spatio-temporal analysis, dimension reduction, factor extraction, economic deprivation, urbanism
    JEL: C31 C33 R11
    Date: 2014–02
  8. By: Ando, Asao; Meng, Bo
    Abstract: This paper presents a framework for an SCGE model that is compatible with the Armington assumption and explicitly considers transport activities. In the model, the trade coefficient takes the form of a potential function,and the equilibrium market price becomes similar to the price index of varietal goods in the context of new economic geography (NEG). The features of the model are investigated by using the minimal setting, which comprises two non-transport sectors and three regions. Because transport costs are given exogenously to facilitate study of their impacts, commodity prices are also determined relative to them. The model can be described as a system of homogeneous equations, where an output in one region can arbitrarily be determined similarly as a price in the Walrasian equilibrium. The model closure is sensitive to formulation consistency so that homogeneity of the system would be lost by use of an alternative form of trade coefficients.
    Keywords: Econometric model, Economic geography, Transportation, Trade theory, SCGE (Spatial Computable General Equilibrium) model, Armington assumption, Transport sector
    JEL: C67 C68 R15
    Date: 2014–02
  9. By: Eduardo Morales; Gloria Sheu; Andrés Zahler
    Abstract: Exporting firms continuously change export destinations. We present reduced-form evidence indicating firms are more likely to export to countries that are geographically close to their previous destinations. This evidence for path dependence in exports is robust to controlling for firm-country specific unobservable determinants of export choices that might be correlated over time and space. Accordingly, we develop a model of export dynamics in which firms' exports in each market may depend on: (a) how similar this market is to the firm's home country (gravity), and (b) how similar it is to other countries to which the firm has previously exported (extended gravity). Given the large number of possible export paths from which forward-looking firms may choose, estimation approaches based on discrete choice models are computationally infeasible. Instead, we use a moment inequality approach. We conclude that extended gravity effects may reduce the cost of entering an export market by up to 40%.
    JEL: F14 L65
    Date: 2014–02

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