The impact of agglomeration effects and accessibility on wages

This paper contributes to the empirical literature on the effects of agglomeration and road accessibility on productivity of firms by looking at the case of Spain. We approach productivity indirectly by using individual wages allocated at the NUTS III level. We use a repeated cross-section of individual micro-data for the years 1995, 2002 and 2006. The availability of interprovincial travel time data for each of the three years allows controlling for transport improvements over the period by using a market potential variable. Additionally, agglomeration is approached by employment density and we control for localization economies, human capital externalities and a large set of individual and workplace characteristics. Estimating by instrumental variables, our results show a positive and significant effect of market accessibility on wages and non linear effect for employment density.

What underlies localization and urbanization economies? Evidence from the location of new firms

The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries (three-digit level). First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. In a second step, we regress these estimates on industry characteristics that are related to the potential importance of three agglomeration theories, namely, labor market pooling, input sharing and knowledge spillovers. Localization effects are low and urbanization effects are high in knowledge-intensive industries, suggesting that firms (partly) locate in large cities to reap the benefits of inter-industry knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry-specific, suggesting that industries (partly) locate in specialized economic environments to share a common pool of specialized workers.

Chaotic dynamics in credit constrained emerging economies

This paper analyzes the role of financial development as a source of endogenous instability in small open economies. By assuming that firms face credit constraints, our model displays a complex dynamic behavior for intermediate values of the parameter representing the level of financial development of the economy. The basic implication of our model is that economies experiencing a process of financial development are more unstable than both very underdeveloped and very developed economies. Our instability concept means that small shocks have a persistent effect on the long run behavior of the model and also that economies can exhibit cycles with a very high period or even chaotic dynamic patterns.

A note on the separability principle in economies with single-peaked

We consider the problem of allocating an infinitely divisible commodity among a group of agents with single-peaked preferences. A rule that has played a central role in the analysis of the problem is the so-called uniform rule. Chun (2001) proves that the uniform rule is the only rule satisfying Pareto optimality, no-envy, separability, and continuity (with respect to the social endowment). We obtain an alternative characterization by using a weak replication-invariance condition, called duplication-invariance, instead of continuity. Furthermore, we prove that Pareto optimality, equal division lower bound, and separability imply no-envy. Using this result, we strengthen one of Chun's (2001) characterizations of the uniform rule by showing that the uniform rule is the only rule satisfying Pareto optimality, equal división lower bound, separability, and either continuity or duplication-invariance.

Knowledge, networks of cities and growth in regional urban systems

The objective of this paper is to measure the impact of different kinds of knowledge and external economies on urban growth in an intraregional context. The main hypothesis is that knowledge leads to growth, and that this knowledge is related to the existence of agglomeration and network externalities in cities. We develop a three-tage methodology: first, we measure the amount and growth of knowledge in cities using the OCDE (2003) classification and employment data; second, we identify the spatial structure of the area of analysis (networks of cities); third, we combine the Glaeser - Henderson - De Lucio models with spatial econometric specifications in order to contrast the existence of spatially static (agglomeration) and spatially dynamic (network) external economies in an urban growth model. Results suggest that higher growth rates are associated to higher levels of technology and knowledge. The growth of the different kinds of knowledge is related to local and spatial factors (agglomeration and network externalities) and each knowledge intensity shows a particular response to these factors. These results have implications for policy design, since we can forecast and intervene on local knowledge development paths.

Real equilibrium exchange rates. A panel data approach for advanced and emerging economies.

Based on an behavioral equilibrium exchange rate model, this paper examines the determinants of the real effective exchange rate and evaluates the degree of misalignment of a group of currencies since 1980. Within a panel cointegration setting, we estimate the relationship between exchange rate and a set of economic fundamentals, such as traded-nontraded productivity differentials and the stock of foreign assets. Having ascertained the variables are integrated and cointegrated, the long-run equilibrium value of the fundamentals are estimated and used to derive equilibrium exchange rates and misalignments. Although there is statistical homogeneity, some structural differences were found to exist between advanced and emerging economies.

Fiscal insurance and debt management in OECD economies

Assuming the role of debt management is to provide hedging against fiscal shocks we consider three questions: i) what indicators can be used to assess the performance of debt management? ii) how well have historical debt management policies performed? and iii) how is that performance affected by variations in debt issuance? We consider these questions using OECD data on the market value of government debt between 1970 and 2000. Motivated by both the optimal taxation literature and broad considerations of debt stability we propose a range of performance indicators for debt management. We evaluate these using Monte Carlo analysis and find that those based on the relative persistence of debt perform best. Calculating these measures for OECD data provides only limited evidence that debt management has helped insulate policy against unexpected fiscal shocks. We also find that the degree of fiscal insurance achieved is not well connected to cross country variations in debt issuance patterns. Given the limited volatility observed in the yield curve the relatively small dispersion of debt management practices across countries makes little difference to the realised degree of fiscal insurance.

Rethinking economies: regulation and responsibility in contemporary ethnographic cases of production and exchange

Informe de investigación realizado a partir de una estancia en la University of London entre el 3 de marzo al 10 de abril 2007. Redacción de un artículo sobre aspectos metodológicos centrales para las ciencias sociales en su vertiente tanto teórica como aplicada: la articulación entre la investigación etnográfica y los modelos abstractos. Tanto la etnografía en sus múltiples formas de describir la realidad observable, como los modelos en su intento por reducir la complejidad con el fin de subrayar las conexiones causales son instrumentos de las ciencias sociales. Los modelos cambian el mundo: gracias a su cualidad abstracta pueden presentar no sólo una imagen de cómo funcionan las cosas, sino también subrayar el aspecto procesual de las conexiones permitiendo de este modo establecer proposiciones prospectivas y guiar las políticas públicas de desarrollo. En la base de la acción encontramos siempre alguna forma de modelización, incluso en el ámbito de las disposiciones subjetivas que mueven a la gente a la toma de decisiones cotidianas. A menudo la realidad escapa a la matriz de los modelos, sin embargo, y el cambio y la adaptación toman caminos insospechados y no planificados. Este proyecto busca construir la posibilidad de un diálogo constructivo, creativo y no-jerárquico entre los modelos de desarrollo económico y la etnografía(...)

Agglomeration and inequality across space: what can we learn from the European experience?

The purpose of this contribution is to draw a picture of the (uneven) distribution of economic activities across the states of the European Union (EU) and the consequences entailed by it. We will briefly summarize the most salient and recent contributions. Then, in the light of the economic geography theory, we will discuss the economic and social advantages and disadvantages associated with a core- periphery structure. In this sense, particular attention will be addressed to the EU financial system of Structural Funds and the effects they produced. Finally, we will formulate some suggestions, relying on the EU experience, that could be of interest to the current Brazilian regional policy.

Public policy for entrepreneurship and innovation: impact in managed and entrepreneurial economies

Many of the most advanced economies of the world have undergone significant transformation in the last few decades. Globalization and technological changes, especially developments in information technologies, have helped to stimulate this transformation. These have contributed to changing institutional frameworks in many respects within the economies including adjustments to economic policies. The results of these transformations take many different forms and are manifested in different areas of an economy. At the heart of these changes however, has been the increasingly important role of entrepreneurship in the economy. The transformed ("new") economy stimulates and supports activities in innovation and entrepreneurship and is labelled the entrepreneurial economy. The "old" economy on the other hand restricts such activities and is referred to as the managed economy (Audretsch & Thurik, 2001).

Pseudomarkets with priorities in large random assignment economies

I study large random assignment economies with a continuum of agents and a finite number of object types. I consider the existence of weak priorities discriminating among agents with respect to their rights concerning the final assignment. The respect for priorities ex ante (ex-ante stability) usually precludes ex-ante envy-freeness. Therefore I define a new concept of fairness, called no unjustified lower chances: priorities with respect to one object type cannot justify different achievable chances regarding another object type. This concept, which applies to the assignment mechanism rather than to the assignment itself, implies ex-ante envy-freeness among agents of the same priority type. I propose a variation of Hylland and Zeckhauser' (1979) pseudomarket that meets ex-ante stability, no unjustified lower chances and ex-ante efficiency among agents of the same priority type. Assuming enough richness in preferences and priorities, the converse is also true: any random assignment with these properties could be achieved through an equilibrium in a pseudomarket with priorities. If priorities are acyclical (the ordering of agents is the same for each object type), this pseudomarket achieves ex-ante efficient random assignments.

Simulating the Impact of Sectorial Productivity Gains on Two Regional Economies: Key Sectors from a Supply Side Perspective

In this paper we simulate and analyse the economic impact that sectorial productivity gains have on two regional Spanish economies (Catalonia and Extremadura). In particular we study the quantitative effect that each sector’s productivity gain has on household welfare (real disposable income and equivalent variation), on the consumption price indices and factor relative prices, on real production (GDP) and on the government’s net income (net taxation revenues of social transfers to households). The analytical approach consists of a computable general equilibrium model, in which we assume perfect competition and cleared markets, including factor markets. All the parameters and exogenous variables of the model are calibrated by means of two social accounting matrices, one for each region under study. The results allow us to identify those sectors with the greatest impact on consumer welfare as the key sectors in the regional economies. Keywords: Productivity gains, key sectors, computable general equilibrium

Alternation and Cooperation in a Two-party System: Implications for Resource-Based Developing Economies

This paper studies cooperation in a political system dominated by two opportunistic parties competing in a resource-based economy. Since a binding agreement as an external solution might be difficult to enforce due to the close association between the incumbent party and the government, the paper explores the extent to which co-operation between political parties that alternate in office can rely on self-enforcing strategies to provide an internal solution. We show that, for appropriate values of the probability of re-election and the discount factor cooperation in maintaining the value of a state variable is possible, but fragile. Another result is that, in such political framework, debt decisions contain an externality element linked to electoral incentives that creates a bias towards excessive borrowing.

Supply Multipliers in Two Regional Economies

This paper focuses on the analysis of the economic impact that sectorial total factor productivity – or valued added - gains have on two regional Spanish economies (Catalonia and Extremadura). In particular it is studied the quantitative effect that each sector’s valued added injections has on household welfare (real disposable income), on the consumption price indices and factor relative prices, on real production (GDP) and on the government and foreign net income. To do that, we introduce the concept of supply multiplier. The analytical approach consists of a computable general equilibrium model, in which it is assumed perfect competition and cleared markets of goods and factors. All the parameters and exogenous variables of the model are calibrated by means of two social accounting matrices, one for each region under study. The results allow identifying those sectors with the greatest multipliers impact on consumer welfare as the key sectors in the regional economies. Keywords: efficiency gains, supply multipliers, key sectors, computable general equilibrium. JEL Classification: C68, R13.

Temporary employment in advanced economies: drawing lessons from Spain

This study analyses the determinants of the rate of temporary employment in various OECD countries using both macro-level data drawn from the OECD and EUROSTAT databases, as well as micro-level data drawn from the 8th wave of the European Household Panel. Comparative analysis is set out to test different explanations originally formulated for the Spanish case. The evidence suggests that the overall distribution of temporary employment in advanced economies does not seem to be explicable by the characteristics of national productive structures. This evidence seems at odds with previous interpretations based on segmentation theories. As an alternative explanation, two types of supply-side factors are tested: crowding-out effects and educational gaps in the workforce. The former seems non significant, whilst the effects of the latter disappear after controlling for the levels of institutional protection in standard employment during the 1980s. Multivariate analysis shows that only this latter institutional variable, together with the degree of coordinated centralisation of the collective bargaining system, seem to have a significant impact on the distribution of temporary employment in the countries examined. On the basis of this observation, an explanation of the very high levels of temporary employment observed in Spain is proposed. This explanation is consistent with both country-specific and comparative evidence.