We derive a quantity-based structural gravity equation system in which both trade flows and error terms are cross-sectionally correlated. This system can be estimated using techniques borrowed from ...the spatial econometrics literature. To illustrate our methodology, we apply it to a well-known Canada—US trade dataset. We find that border effects between the USA and Canada are smaller than suggested by previous studies: about 7.5 for Canadian provinces and about 1.3 for US states. Hence controlling directly for cross-sectional interdependence among both trade flows and error terms reduces measured border effects by capturing 'multilateral resistance'.
This paper presents a theoretical growth model which explicitly takes into account technological interdependence among economies and examines the impact of spillover effects. Technological ...interdependence is assumed to operate through spatial externalities. The magnitude of the physical capital externalities at steady state, which is not usually identified in the literature, is estimated using a spatial econometric specification. Spatial externalities are found to be significant. This spatially augmented Solow model yields a conditional convergence equation which is characterized by parameter heterogeneity. A locally linear spatial autoregressive specification is then estimated providing a convergence speed estimate for each country of the sample.
The aim of this paper is to study the space-time dynamics of European regional per capita gross domestic product (GDP) in the perspective of the enlargement of the European Union using exploratory ...spatial data analysis. We find strong evidence of global and local spatial autocorrelation as well as spatial heterogeneity in the distribution of regional per capita GDP in a sample of 258 European regions including regions from acceding and candidate European countries over the period 1995-2000. However, contrary to previous results obtained in the literature highlighting a North-South polarization scheme, the enlargement process leads to a new North-West-East polarization scheme. The economic dynamism of EU15 regions and acceding or candidate regions is also investigated by exploring the spatial pattern of regional growth. Implications for regional development and cohesion policies are finally suggested. PUBLICATION ABSTRACT
This paper investigates the relationship between economic growth and bank concentration. We introduce imperfect competition within the banking system according to the Schumpeterian growth paradigm, ...and we theoretically and empirically show that the effects of bank concentration on economic growth depend on the proximity to the world technology frontier. The theory predicts that when a country reaches a sufficient level of financial development, bank concentration has a negative effect on development and growth and that this effect increases when the country approaches the frontier. However, for countries with credit constraints, growth depends on only financial intermediation.
This paper proposes an integrated theoretical and methodological framework characterized by technological interactions to explain growth processes from a Schumpeterian perspective. Global ...interdependence implied by international R& D spillovers needs to be taken into account in both the theoretical and empirical models. For this task, spatial econometrics is the appropriate tool. The econometric model we propose includes the neoclassical growth model as a particular case. We can therefore explicitly test the role of R& D investment in the long-run growth process against the Solow growth model. Finally, the properties of our spatial econometric specification allow the explicit evaluation of the impact of home and foreign R& D spillovers.
The purpose of this paper is to evaluate the impact of African regional blocs on African trade flows while allowing for spatial interdependence between trade flows. To this end, we derive a spatial ...gravity equation by removing the implicit assumption that trade flows between two trading partners are independent of what happens in the rest of the trading world. We estimate the border effects for five Sub-Saharan regional blocs (CEMAC, COMESA, ECOWAS, SADC and WAEMU). We decompose the border effect into two components: a trade-boosting intra-bloc effect and a trade-reducing inter-bloc effect. Our findings show that trade agreements produce positive effects on intra-bloc trade flows and these effects are particularly prominent when the blocs are advanced in their integration process. In addition, the spatial interdependence between trade flows is reflected in a negative relationship as implied by the theoretical model, suggesting a natural measure of spatial competition.
Our article analyzes the determinants of local growth control decisions, which are modeled as the result of a political struggle between different groups of voters and organized lobbies. We show that ...under specific hypotheses, a higher homeownership rate can induce lower levels of controls. Considering residential choices as endogenous to growth control policies, the local decisions to control growth become strategically interdependent. Assuming imperfect mobility, we show that a spatial econometric specification can be directly derived from our theoretical model. Our empirical analysis concerning the determinants of the "taxe locale d'équipement", a French local development tax, is thus naturally based on spatial econometrics. Its results confirm the major predictions of our model.
Anderson and van Wincoop (American Economic Review (2003), 69:106) make a convincing argument that traditional gravity equation estimates are biased by the omission of multilateral resistance terms. ...They show that these multilateral resistance terms are implicitly defined by a system of non‐linear equations involving all regions' GDP shares and a global interdependence structure involving trade costs. We show how linearizing the system of non‐linear relationships around a free trade world leads to an interdependence structure that can be used as a Bayesian prior to produce statistical estimates of the inward and outward multilateral resistance indices. This reflects a statistical approach that has advantages over the non‐stochastic numerical approach used by Anderson and van Wincoop (2003) to solve for these indices.
The aim of this paper is to show how the spatial autocorrelation phenomenon often observed in the world distribution of income per capita, can be introduced structurally as the outcome of spillovers ...effects into a development accounting equation. Neglecting spatial autocorrelation potentially biases our vision of the role played by physical capital in the development process. We show that the total contribution of physical capital accounts for almost 90% of the differences between developing countries and the richest countries.
The purpose of this paper is to evaluate the impact of African regional blocs on African trade flows while allowing for spatial interdependence between trade flows. To this end, we derive a spatial ...gravity equation by removing the implicit assumption that trade flows between two trading partners are independent of what happens in the rest of the trading world. We estimate the border effects for five Sub-Saharan regional blocs (cemac, comesa, ecowas, sadc and waemu). We decompose the border effect into two components: a trade-boosting intra-bloc effect and a trade-reducing inter-bloc effect. Our findings show that trade agreements produce positive effects on intra-bloc trade flows and these effects are particularly prominent when the blocs are advanced in their integration process. In addition, the spatial interdependence between trade flows is reflected in a negative relationship as implied by the theoretical model, suggesting a natural measure of spatial competition.
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