nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒04‒24
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Closing the price gap - Von Thünen applied to wheat markets in 18th century Spain By CERMEÑO, Alexandra L.; SANTIAGO-Caballero, Carlos
  2. Italy and the trap of GVC downgrading: labour dependence in the European geography of production By Lorenzo Cresti; Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito
  3. Trade Shocks, Population Growth, and Migration By Sofía Fernández Guerrico
  4. Trade Liberalization and Local Development in India: Evidence from Nighttime Lights By Priyaranjan Jha; Karan Talathi
  5. Decomposing the Impact of Immigration on House Prices By Rosa Sanchis-Guarner
  6. The Economic Effects of Climate Change in Dynamic Spatial Equilibrium By Rudik, Ivan; Lyn, Gary; Tan, Weiliang; Ortiz-Bobea, Ariel
  7. Impacts of Droughts on Economic Activities in The São Paulo Metropolitan Area By Sass, Karina Simone; Haddad, Eduardo Amaral; Mendiondo, Eduardo Mario
  8. READ-GER: Introducing German Real-Time Regional Accounts Data for Revision Analysis and Nowcasting By Robert Lehmann
  9. Territoires d’industrie : hétérogénéité et convergence ? By Nadine Levratto; Mounir Amdaoud

  1. By: CERMEÑO, Alexandra L.; SANTIAGO-Caballero, Carlos
    Abstract: According to the literature, transaction costs are influenced by several factors, ranging from institutional differences to asymmetric information. However, testing these hypotheses requires rich data not usually available in historical sources. In this study, we use a large-scale census of 1749 to analyze price gaps of wheat across rural municipalities and their local markets in Old Castile. For the first time in the literature, we examine price gaps across 5, 163 contiguous municipalities and assess transaction costs with unprecedented detail. By employing canonical variables and testing for spatial autocorrelation, we explore the determinants of transaction costs and contribute to the ongoing debates around the "Little Divergence." Our findings not only shed light on the factors that influence transaction costs but also represent a step forward in operationalizing them. Overall, this study offers new insights into the factors that shape transaction costs and contributes to the literature on the "Little Divergence." Our analysis demonstrates the importance of rich data in testing hypotheses related to transaction costs and highlights the benefits of using historical data to inform contemporary debates in economics.
    Keywords: Price gaps, transaction costs, spatial equilibrium model, autocorrelation
    JEL: F15 N73 N93 R41
    Date: 2023–04
  2. By: Lorenzo Cresti; Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito
    Abstract: How does Italy position inside the European structure of trade relationships? How labour bilateral flows have changed over time? Which type of employment activity has been outsourced? Which insourced? Focusing on a three-country perspective, what are the employment bilateral relationships between Italy-Germany-Poland (descending periphery-core-ascending periphery)? To address these questions we develop a novel set of bilateral labour dependence indicators inside I-O production networks. Overall, we provide evidence of the reconfiguration of Italy as falling into the trap of GVC downgrading, with an increasing number of trade relationships in employment requirements, particularly in the most strategic productions, as insourced from abroad. The offshoring strategy conducted so far has resulted in a weakening of its internal production capacity and employment absorption, even more harshly when compared to other European countries.
    Keywords: Input-output; global value chains; international division of labour; core-periphery.
    Date: 2023–04–02
  3. By: Sofía Fernández Guerrico
    Abstract: This paper examines the effect of trade-induced changes in Mexican labor demand on population growth and migration responses at the local level. It exploits cross-municipality variation in exposure to a change in trade policy between the United States and China that eliminated potential tariff increases on Chinese imports, negatively affecting Mexican manufacturing exports to the United States. Municipalities more exposed to the policy change, via their industry structure, experienced greater employment loss. In the five years following the change in trade policy, more exposed municipalities experience increased population growth, driven by declines in out-migration. Conversely, 6 to 10 years after the change in trade policy, exposure to increased trade competition is associated with decreased population growth, driven by declines in in-migration and return migration rates, and increased out-migration. The sluggish regional adjustment is consistent with high moving costs and transitions across sectors in the short term.
    Keywords: Trade competition; Job displacement; Population growth
    JEL: F16 J23 O12 R12 R23
    Date: 2023–02–27
  4. By: Priyaranjan Jha; Karan Talathi
    Abstract: We study the impact of the Indian trade liberalization of 1991 on development at the district level using satellite nighttime lights per capita as a proxy for development. We find that on average trade liberalization increased nighttime lights per capita but there was considerable heterogeneity in the effect. In particular, districts in states with flexible labor laws, districts with better road networks, proximity to the coast, or higher female labor force participation rate seem to have benefited more than other districts.
    Keywords: trade liberalization, nighttime lights, per capita income, tariffs, labor laws
    JEL: F13 F14 O11 O24
    Date: 2023
  5. By: Rosa Sanchis-Guarner (Universitat de Barcelona & IEB)
    Abstract: Immigrant inflows affect local house prices by increasing housing demand when housing supply is fixed. In this paper, I show that we can formally decompose total demand changes into changes stemming from an immediate increase in population due to new arrivals (“partial effect”) and additional changes in demand from relocated natives (“induced effect”). I propose a methodology to separately estimate these two effects using Spanish provinces’ data from 2001- 2012. Applying an instrumental variables approach, I find that a 1 p.p. increase in the immigration rate increases average house prices by 3.3% and rents by 1%. Partial demand estimates are 24% smaller than the total estimates, due to immigrants and natives locating in the same provinces. The results show that accounting for the impact of immigration on native location choices is key to understanding net demand adjustments, as partial and total effects can significantly differ depending on native population mobility.
    Keywords: Immigration, House Prices, Spain
    JEL: J61 R12 R21
    Date: 2022
  6. By: Rudik, Ivan; Lyn, Gary; Tan, Weiliang; Ortiz-Bobea, Ariel
    Abstract: We develop a dynamic-spatial equilibrium model to quantify the economic effects of climate change with a focus on the United States. We find that climate change reduces US welfare by 4% and global welfare by over 20%. Market-based adaptation through trade and labor reallocation increases US welfare, but with substantial spatial heterogeneity. Adaptation through labor reallocation and trade are complementary: together they boost welfare by 50% more than their individual effects. We additionally develop a new dynamic envelope theorem method for measuring welfare impacts in reduced form and to validate our quantitative model. We find that welfare distributions from our two approaches are consistent, indicating that our quantitative model captures the first-order factors for measuring the distributional impacts of climate change. The level and distribution of the economic impacts of climate change depends the sectoral and spatial structure of the economy, and the extent to which different markets can adapt.
    Keywords: Environmental Economics and Policy, International Relations/Trade
    Date: 2022
  7. By: Sass, Karina Simone (Departamento de Economia, Universidade de São Paulo); Haddad, Eduardo Amaral (Departamento de Economia, Universidade de São Paulo); Mendiondo, Eduardo Mario (Sao Carlos School of Engineering, University of Sao Paulo)
    Abstract: Droughts can lead to severe socioeconomic impacts on cities by affecting industrial production, food and energy price, and income. Given that the frequency and intensity of this climatic event are increasing because of climate change, assessing the vulnerability of economic activities to drought is essential to develop adaptation strategies. This study explores the economic effects of droughts on the São Paulo Metropolitan Area (SPMA), a region with a high concentration of people and economic activities and frequently hit by droughts. Our method comprises an integrated system of analysis that puts together climatic and economic databases. The integrated modeling system is divided into three steps: i) calculate a variable to represent drought conditions; ii) estimate the direct impact of droughts on sectoral activities through an econometric model; and iii) estimate the total impact on the economy through a Spatial Computable General Equilibrium (SCGE) model calibrated with municipal data. The econometric model results showed that energy and water-intensive industries are more sensitive to droughts in the SPMA. The results from the simulations in the SCGE model showed that the impact on these sectors could spread to the entire economy, indirectly affecting activities such as land transport, construction, and personal services and decreasing the total production and disposable income of metropolitan municipalities.
    Keywords: local droughts impact; industrial activity; regional analysis; integrated modeling
    JEL: C68 R10
    Date: 2023–03–30
  8. By: Robert Lehmann
    Abstract: Accurate real-time macroeconomic data are essential for policy-making and economic nowcasting. In this paper, I introduce a real-time database for German regional economic accounts (READ-GER). The database contains real-time information for nine macroeconomic aggregates and the 16 German states. I conduct both a revision analysis and a nowcasting experiment. Whereas the first estimates show no systematic revision errors by pooling the states together, this procedure suppresses the revision characteristics of single states. For half of the 16 German states I find that the first estimates are no optimal predictions, thus, leaving room for improvements in the future. The real-time nowcasts for real gross domestic product growth based on a mixed-frequency Vector Autoregression are very accurate, beat several benchmark models and are as precise or better as the first official estimates. More regional data would help to further increase the model’s nowcast performance and thus its properties for the first estimates from regional accounts.
    Keywords: regional economic nowcasting, revision analysis, mixed-frequency Vector Autoregression, real-time regional accounts
    JEL: C32 C53 C82 E01 E32 R11
    Date: 2023
  9. By: Nadine Levratto; Mounir Amdaoud
    Abstract: This article aims to explore the nature of employment dynamics in industrial territories in France from 2015 to 2020. Two complementary methods of investigation are deployed. The first rests upon the Markov chain model to analyse the relative growth of industrial areas and measure movements in the distribution of employment rates. The second, more recent, tests the hypothesis of convergence in clubs and completes the previous one by specifying and identifying each territory subject to mobility within the distribution. The results highlight the heterogeneity of growth processes, show the existence of several clubs of industry territories evolving at different rates and conclude the absence of an industry trap. They plead in favour of implementing policies to support the economy at the territorial level.
    Keywords: Industrial areas, employment growth, territorial heterogeneity, convergence clubs, Markov chains
    JEL: R11 C14 O42 R15
    Date: 2023

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