Agglomeration Externalities in Germany

Several recent econometric investigations found externalities related to the density of economic activity to account for one fifth to one half of total regional variations in average labor productivity in the U.S. and big European countries, including Germany. The present paper shows for German NUTS 3 regions, first, that this result is not robust against a more extensive control for private returns that may be correlated with economic density. The paper presents, second, evidence of various types of agglomeration economies, including labor-market pooling, human-capital externalities, localized R&D spillovers, gains from the variety of intermediate goods, to affect regional productivity significantly. Although the productivity effects of these externalities within regions cannot be identified because they are observationally equivalent to individual returns, they can be identified by exploiting the spatial dimension of the data. Keywords: productivity, agglomeration externalities, spatial econometrics JEL: C21, R12

Does Foreign Direct Investment Promote Regional Development in Developed Countries? A Markov Chain Approach for US States.

Direktinvestition; Regionale Entwicklung; Sozialprodukt; Regionale Disparität; Schätzung; USA;Markov transition probability , likelihood ratio test , FDI , per-capita income , regional development , United States of America;

Testing Nonlinear New Economic Geography Models

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.New economic geography, spatial econometrics

Markov or not Markov - this should be a question

Although it is well known that Markov process theory, frequently applied in the literature on income convergence, imposes some very restrictive assumptions upon the data generating process, these assumptions have generally been taken for granted so far. The present paper proposes, resp. recalls chi-square tests of the Markov property, of spatial independence, and of homogeneity across time and space to assess the reliability of estimated Markov transition matrices. As an illustration we show that the evolution of the income distribution across the 48 coterminous U.S. states from 1929 to 2000 clearly has not followed a Markov process.

Is regional innovative activity path-dependent? An empirical analysis for Germany

Based on a standard idea-based model of endogenous growth we test the hypothesis that regional innovative activity is path-dependent, and investigate the geographical scope of knowledge spillovers. Using data for West-German regions, two alternative indicators of the stock of knowledge are specified. One is based on patent applications, the other on numbers of researchers. With patents as indicator the path-dependence hypothesis is rejected, and knowledge spillovers from neighboring regions appear to be irrelevant. With numbers of researchers as indicator, by contrast, there is evidence for both path-dependence, and the relevance of interregional knowledge spillovers. Several extensions and refinements are discussed which may help resolving these apparent contradictions

Einige kritische Anmerkungen zu empirischen Tests des ricardianischen Äquivalenztheorems

Zahlreiche empirische Tests des Ricardianischen Äquivalenztheorems beruhen auf Kleinst-Quadrat-Schätzungen von Konsumfunktionen. Im vorliegenden Aufsatz wird gezeigt, daß einige dieser Schätzungen keine Grundlage für aussagekräftige Tests des Theorems bilden können. Zum einen sind die erklärenden Variablen genau dann korreliert, wenn der Staat eine defizitfinanzierte Steuersenkung durchführt. Damit können sich die Auswirkungen der Politik, die vom Äquivalenztheorem erfaßt wird, nicht angemessen in den Regressionskoeffizienten niederschlagen. Zum anderen finden unangemessene statistische Abgrenzungen der Einkommensvariablen Verwendung.Many empirical tests of the Ricardian Equivalence Theorem are based on ordinary leastsquares estimations of consumption functions. In this paper it is shown that some of these estimations cannot be used to test the theorem. One reason is that the exogenous variables are correlated when governmental tax cuts are deficit-financed. The regression coefficients cannot correctly reflect the effects of a policy the Equivalence Theorem refers to. Another reason is that the income variables employed in the estimations are inappropriate

Commuting, externalities, and the geographical sizes of metropolitan areas

The paper proposes an econometric approach for quantifying jointly the geographical scope of commuting as well as the various forms of agglomeration economies originating from metropolitan centers. Adopting an urban economics perspective, and using land prices to measure their aggregate effects, the approach estimates the geographical reach of commuting and urban externalities from a hierarchical system of gradient functions. The results for West German NUTS3 regions indicate that metropolitan areas may be larger than suggested by MSA classifications based on commuting only. Metropolitan subcenters are found to enlarge metropolitan areas significantly