nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒02‒14
six papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The political geography of cities By Bluhm, Richard; Lessmann, Christian; Schaudt, Paul
  2. Brexit and labour market inequalities: potential spatial and occupational impacts By Alex Davenport; Peter Levell
  3. A regional Input-Ouptut model of the Covid-19 crisis in Italy: decomposing demand and supply factors By Severin Reissl; Alessandro Caiani; Francesco Lamperti; Tommaso Ferraresi; Leonardo Ghezzi
  4. University proximity at teenage years and educational attainment By George Agwu; Oussama Ben Atta
  5. Malaria and Economic Development in the Short-term: Plasmodium falciparum vs Plasmodium vivax By Michaela Kecskésová; Štěpán Mikula
  6. "Economic Geography and a Theory of International Currency: Implications of a Random Matching Model" Abstract This paper presents a new theory that may explain why the US dollar is the dominant medium of exchange in international transactions. Unlike previous studies, we investigate a model in which economic geography affects the international currency choice. The model is based on a random matching model in which agents trade with foreign agents using a specific currency. We consider a world that consists of two regions, the EU and the USA, each of which has different active time zones. In local transactions, matched agents use their local currency. However, in international transactions, sellers choose either the Euro or the US dollar as the invoice currency to maximize their expected discounted utility. We show that under some reasonable conditions, the US dollar becomes the unique international currency, even if each region is symmetric in all ways except for their locations. Further, when the US dollar is used for international transactions, the expected discounted utility becomes higher in the US than in the EU in the steady-state equilibrium. By Shin-ichi Fukuda; Mariko Tanaka

  1. By: Bluhm, Richard (UNU-MERIT, Maastricht University, and Leibniz University Hannover, Institute of Macroeconomics); Lessmann, Christian (Technische Universität Dresden, Ifo Institute for Economic Research, and CESifo Munich); Schaudt, Paul (University of St. Gallen, Department of Economics)
    Abstract: We study the link between subnational capital cities and urban development using a global data set of hundreds of first-order administrative and capital city reforms from 1987 until 2018. We show that gaining subnational capital status has a sizable effect on city growth in the medium run. We provide new evidence that the effect of these reforms depends on locational fundamentals, such as market access, and that the effect is greater in countries where urbanization and industrialization occurred later. Consistent with both an influx of public investments and a private response of individuals and firms, we document that urban built-up, population, foreign aid, infrastructure, and foreign direct investment in several sectors increase once cities become subnational capitals.
    Keywords: capital cities, administrative reforms, economic geography, urban primacy
    JEL: H10 R11 R12 O1
    Date: 2021–10–20
  2. By: Alex Davenport (Institute for Fiscal Studies); Peter Levell (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: In this paper we examine the possible distributional impacts of new trade barriers associated with the new Trade and Cooperation Agreement governing relations between the UK and EU after Brexit. We use a model of labour demand that incorporates input-output links across industries, and that allows for demand substitution by firms and consumers and worker reallocation across industries. We find that workers’ exposure is moderately increasing across the earnings distribution. Exposure is greater for men than for women as they are more likely to work in manufacturing industries that are relatively harder hit by new trade barriers. Looking across areas, we find that exposure to new Brexit trade barriers is uncorrelated with measures of local deprivation and the impacts of the recent COVID-19 pandemic.
    Date: 2021–11–15
  3. By: Severin Reissl; Alessandro Caiani; Francesco Lamperti; Tommaso Ferraresi; Leonardo Ghezzi
    Abstract: We extend the regional input-output model for the economic impact assessment of Covid-19 lockdowns in Italy proposed in Reissl et al. (2021) by incorporating the effects of changes in mobility on the level and composition of consumption demand. We estimate the model on sectoral data for 2020 and perform an out-of-sample validation exercise for the first half of 2021, finding that the model performs well. We then evaluate the relative importance of demand- and supply-side factors in determining our simulation results. During the national lockdown of spring 2020 the impacts of supply-side (labor) shocks can account for the vast majority of output losses. In the following stages of the epidemic income and mobility-related effects on final demand play pivotal roles at the aggregate and regional levels, as well as for most sectors. While policies supporting demand may hence be appropriate, their effectiveness may be hampered when demand is chiefly restrained by the mobility-related effect, and not by income.
    Keywords: Input-output; Covid-19; Lockdown; Italy; Demand and Supply Shocks.
    Date: 2022–02–02
  4. By: George Agwu (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique, AE-FUNAI - Alex Ekwueme Federal University Ndufu-Alike, Ikwo); Oussama Ben Atta (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique, Centre de recherche de l'ESC Pau - ESC Pau)
    Abstract: This paper investigates the impact of geographical proximity to universities on educational attainment in Nigeria. We relate individuals level of schooling obtained from three rounds of the Nigeria's Living Standard Measurement Survey (LSMS) to spatial distance to university measured by pairing residential and university campuses GPS coordinates. To identify the effect of the distance to university, we exploit the theory of residential sorting to instrument residential proximity to university. Specifically, we instrument distance to university drawing on variations in households' proximity to state boundary posts and neighbourhood population density. The instrumental variable estimates show a negative and significant effect of distance revealing that geographical constraints during teenage years represent a barrier to the subsequent human capital acquisition. Additional results from a difference-indifference estimation strategy indicate that a large scale establishment of universities had beneficial trickle-down effects by decreasing the intention to drop out of secondary school, supporting evidence of the role of geographical constraints in the accumulation of human capital in Nigeria.
    Keywords: Educational attainment,Distance to university,University attendance,School dropout,Nigeria
    Date: 2021–12–18
  5. By: Michaela Kecskésová (Department of Economics, Masaryk University); Štěpán Mikula (Department of Economics, Masaryk University)
    Abstract: Malaria – a disease caused by parasitic microorganisms of the Plasmodium genus – has been shown to impede economic growth and socioeconomic development in the long-term. In this paper we use annual regional data from India to show that malaria outbreaks are associated with an immediate decline in economic development approximated by night light intensity. We find the association to be significant for outbreaks of both the globally most prevalent Plasmodium species: Plasmodium falciparum and Plasmodium vivax. The estimated associations are quite sizeable. Severe outbreaks correlate with night light reductions of 5% of the standard deviation for P. falciparum and 4% for P. vivax.
    Keywords: Malaria, Economic development, India, Plasmodium falciparum, Plasmodium vivax, Night light intensity
    JEL: I15 R11 R12 N55
    Date: 2022–02
  6. By: Shin-ichi Fukuda (Faculty of Economics, The University of Tokyo); Mariko Tanaka (Musashino University)

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