nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒09‒25
three papers chosen by
Andreas Koch, Institut für Angewandte Wirtschaftsforschung

  1. The Local Origins of Business Formation By Emin M. Dinlersoz; Timothy Dunne; John Haltiwanger; Veronika Penciakova
  2. Micro- and Macroeconomic Impacts of a Place-Based Industrial Policy By Enghin Atalay; Ali Hortacsu; Mustafa Runyun; Chad Syverson; Mehmet Fatih Ulu
  3. Spatial and Spatiotemporal Volatility Models: A Review By Philipp Otto; Osman Do\u{g}an; S\"uleyman Ta\c{s}p{\i}nar; Wolfgang Schmid; Anil K. Bera

  1. By: Emin M. Dinlersoz; Timothy Dunne; John Haltiwanger; Veronika Penciakova
    Abstract: What locations generate more business ideas, and where are ideas more likely to turn into businesses? Using comprehensive administrative data on business applications, we analyze the spatial disparity in the creation of business ideas and the formation of new employer startups from these ideas. Startups per capita exhibit enormous variation across granular units of geography. We decompose this variation into variation in ideas per capita and in their rate of transition to startups, and we find that both components matter. Observable local demographic, economic, financial, and business conditions account for a significant fraction of the variation in startups per capita—and more so for the variation in ideas per capita than in transition rate. Income, education, age, and foreign-born share are generally strong positive correlates of both idea generation and transition. Overall, the relationship of local conditions with ideas differs from that with transition rate in magnitude and, sometimes, in sign: certain conditions (notably, the African American share of the population) are positively associated with ideas but negatively with transition rates. We also find a close correspondence between the actual rank of locations in terms of startups per capita and the predicted rank based only on observable local conditions—a result useful for characterizing locations with high startup activity.
    Keywords: entrepreneurship; firm entry; business formation; business dynamism; economic geography
    JEL: L26 R12 R23
    Date: 2023–08–02
  2. By: Enghin Atalay; Ali Hortacsu; Mustafa Runyun; Chad Syverson; Mehmet Fatih Ulu
    Abstract: We investigate the impact of a set of place-based subsidies introduced in Turkey in 2012. Using firm-level balance-sheet data along with data on the domestic production network, we first assess the policy’s direct and indirect impacts. We find an increase in economic activity in industry-province pairs that were the focus of the subsidy program, and positive spillovers to the suppliers and customers of subsidized firms. With the aid of a dynamic multi-region, multi-industry general equilibrium model, we then assess the program’s impacts. Based on the calibrated model, we find that, in the long run, the subsidy program is modestly successful in reducing inequality between the relatively underdeveloped and more prosperous portions of the country. These modest longer-term effects are due to the ability of households to migrate in response to the subsidy program and to input-output linkages that traverse subsidy regions within Turkey.
    Keywords: place-based policies; investment; inequality
    JEL: D57 F16 H25 J38 R12
    Date: 2023–06–13
  3. By: Philipp Otto; Osman Do\u{g}an; S\"uleyman Ta\c{s}p{\i}nar; Wolfgang Schmid; Anil K. Bera
    Abstract: Spatial and spatiotemporal volatility models are a class of models designed to capture spatial dependence in the volatility of spatial and spatiotemporal data. Spatial dependence in the volatility may arise due to spatial spillovers among locations; that is, if two locations are in close proximity, they can exhibit similar volatilities. In this paper, we aim to provide a comprehensive review of the recent literature on spatial and spatiotemporal volatility models. We first briefly review time series volatility models and their multivariate extensions to motivate their spatial and spatiotemporal counterparts. We then review various spatial and spatiotemporal volatility specifications proposed in the literature along with their underlying motivations and estimation strategies. Through this analysis, we effectively compare all models and provide practical recommendations for their appropriate usage. We highlight possible extensions and conclude by outlining directions for future research.
    Date: 2023–08

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