Spatially blind trade and fiscal impact policies and their impact on regional economies

The evidence for the US suggests that spatially blind policies often generate greater impacts on regional economic growth and development than policies specifically targeted at regions on regional issues generally. In this presentation, attention will be directed to two sets of national policies that have been promulgated without due consideration of their specific spatial (regional) impacts – trade policy and fiscal policy.Drawing on research conducted for the US, Japan and Brazil, an examination of trade policies will be presented, using the experience of NAFTA in North America and MERCOSUR in Brazil. Some further analysis of experience in Colombia will also provide insights into the role of national trade policy and, in the case of Colombia, fiscal decentralization policies. The second part of the presentation will examine fiscal policy impacts mediated through regional business cycles; the experience of Japan and the US will be examined.The results affirm the important implications that national (spatially blind) policies can have on regional economies; in the case of Brazil, trade policies have exacerbated already wide differentials in per capita income across states.     

EVALUATING SUPPLY-SIDE AND DEMAND-SIDE SHOCKS FOR FISHERIES: A COMPUTABLE GENERAL EQUILIBRIUM (CGE) MODEL FOR ALASKA

This study used computable general equilibrium (CGE) models to investigate the economic effects of three exogenous shocks to Alaska fisheries: (1) reduction in pollock allowable catch (TAC); (2) increase in fuel price; and (3) reduction in demand for seafood. Two different model versions, ‘Keynesian’ and ‘neoclassical’, were used to estimate impacts on endogenous output, employment, value added, and household income. By using a CGE model, this study overcomes the limitations of fixed-price models (such as input–output models) including (1) inability to calculate welfare effects due to fixed prices; and (2) difficulty of addressing supply-side shocks. There are currently few examples of CGE studies addressing fisheries issues appearing in the literature. Among those, this study is unique in that it uses a relatively disaggregated sector scheme and examines both supply-side and demand-side shocks.     

The macroeconomic impact of economic uncertainty and financial shocks under low and high financial stress

External financial frictions might increase the severity of economic uncertainty shocks. We analyze the impact of aggregate uncertainty and financial condition shocks using a threshold vector autoregressive (TVAR) model with stochastic volatility during distinct US financial stress regimes. We further examine the international spillover of the US financial shock. Our results show that the peak contraction in euro area industrial production due to uncertainty shocks during a financial crisis is nearly-four times larger than the peak contraction during normal times. The US financial shocks have an influential asymmetric spillover effect on the euro area. Furthermore, the estimates reveal that the European Central Bank (ECB) is more cautious in implementing a monetary policy against uncertainty shocks while adopting hawkish monetary policies against financial shocks. In contrast, the Fed adopts a more hawkish monetary policy during heightened uncertainty, whereas it acts more steadily when financial stress rises in the economy.     

Estimating and interpreting internal migration flows in Russia by accounting for network effects

The present article follows two objectives. First, to apply a recently developed spatial interaction model and discuss its power in explaining social developments. Second, to obtain information on internal migration's determinants in Russia by taking into account that its eastern and western regions differ in many respects. Two alternative panel specifications are considered, labelled “spatial interaction specification with exogenous spatial lags” and “gravity-type specification with network effects”. While both specifications are designed to capture the impacts of neighbouring regions in migration dynamics, they differ with respect to the implementation of fixed effects. It is argued that neighbourhood impacts manifest themselves either as spillover effects, which amplify a variable's impact, or competition effects, which attenuate them. The results show that variables indeed differ from each other in these respects, demonstrating how migration patterns are subject to events beyond the directly involved regions, and that these are furthermore influenced by the distances between regions. In addition, the results provide further evidence that migration determinants differ for Eastern and Western Russia.     

An Income Tax Increase to Fund Higher Education: A CGE Analysis for Chile

An increase in income taxes to fund education was one of the demands made by the social movements that emerged in Chile in 2011. Currently, the Chilean Congress is enacting a tax reform to raise money for higher education. This study aims to show the dynamic effects on the general equilibrium of the Chilean economy under two alternative approaches: a subsidy to lower the price of higher education (public and private), and greater spending on public higher education to reduce household payments for education. The social accounting matrix (SAM) used to calibrate the computable general equilibrium (CGE) model has 38 economic sectors, including the production structure of private education and public education. The study mainly concludes that a subsidy policy has significant advantages over increasing higher public education spending, regarding its effects on variables such as GDP, investment, and household incomes, while both policies have a similar effect on poverty and income distribution.     

The international transmission channels of US supply and demand shocks: Evidence from a non-stationary dynamic factor model for the G7 countries

We employ a multi-country non-stationary dynamic factor model to assess spillover effects and transmission channels of US supply and demand shocks on a variety of macroeconomic variables in individual non-US G7 countries. We find that trade, financial and confidence channels all play a significant role in the international transmission of US shocks. However, the results point to substantial heterogeneities of shock transmission across the individual G7 economies. In particular, we find negative transmission effects for Italy and Japan as the only two G7 countries not well integrated into global value chains. Moreover, the exchange rate responses of Germany, France and Italy turn out to be far less pronounced in comparison to the other G7 economies which we relate to their membership of the euro area and their coordinated monetary policies prior to the establishment of the euro. Whereas we document a close comovement of stock market dynamics across the G7 countries, we find credit and real estate markets to be less synchronized. We do not find the effects and transmission channels to be fundamentally affected by the post-2008 economic environment.     

How do interregional spillovers influence the distribution of technology? The case of Chinese manufacturing

The Chinese economy displays considerable inequality across regions. In this paper, we analyzed the distribution of intermediate input shares in China. We use regional input–output tables from 2007 and find that regions with higher GDP per capita generally had higher input shares, regardless of sector. Then, using intermediate input shares as a proxy of technology, we analyzed the pattern of regional technology distributions across manufacturing sectors as well as the extent of interregional technology spillovers. Our results indicate that interregional backward spillovers have significantly positive impacts on the shape of the technology distributions in eastern (coastal) regions. By contrast, the vertical spillovers of the central and western regions are largely dominated by intra-regional forward effects. Our results suggest that the shift of Chinese manufacturing from coastal to inland regions with lower production costs cannot reduce the imbalance among regions unless the technology gap is narrowed.     

公共服务供给、空间溢出与新型城镇化发展质量

本文利用省级面板数据实证研究了公共服务供给对新型城镇化发展质量的作用机理及其空间效应。研究结果表明,公共服务供给和新型城镇化发展质量存在显著的空间相关性,且公共服务供给对新型城镇化发展质量的空间溢出效应日趋增强。教育具有显著的正向空间溢出作用,交通基础设施的空间溢出效应为负但并不显著,医疗具有较为明显的空间抑制作用。进一步进行区域异质性分析发现,公共服务供给对新型城镇化的直接效应和空间效应在三大地区存在明显的差异性。因此,不同区域要基于公共服务供给及其空间溢出效应的特点制定新型城镇化高质量发展政策措施,包括优化公共交通基础设施服务功能、提高人力资源配置效率、改善区域性医疗卫生条件等。     

Inequality and Growth in European Regions: Towards a Place-based Approach

Abstract

Does agglomeration matter for growth? This paper addresses this question by evaluating the impact that intra-regional income distribution has on regional growth in Europe. By using a spatially augmented Solow growth model, we investigate the convergence process among 188 EU regions between 1991 and 2004 and extend the traditional growth models to account for the impact of regional inequality on growth, as well as the effects of interaction among regions. Our assumption is that existing levels of inequality between sub-regional territorial units could positively contribute to regional economic growth in Europe, through the positive effects generated by the emergence of agglomeration economies. Our results show that while we cannot find any overall significant relationship in Europe between agglomeration and growth, once we distinguish between Objective 1 and Non-objective 1 regions we are able to find that agglomeration positively impacts subsequent growth, but only in the less developed regions.     

Analyzing quantile spillover effects among international financial markets

This paper investigates the quantile-based spillover effects among 17 stock markets from January 1993 to January 2022, utilizing a quantile approach based on the variance decomposition of a quantile vector autoregression (QVAR) model. Compared with the traditional mean-based spillover measures, this new quantile approach allows for a nuanced investigation of spillovers at every quantile and capture spillovers under extreme events. The results show that: (1) the total spillover is high and exhibits strong time-varying characteristics, and the tail spillover is higher and more complex in scale and direction; (2) the spillover at each quantile level shows an upward trend, especially during the 2008 crisis and the COVID-19 epidemic; (3) developed countries (or regions) are the net exporters of stock market spillovers, while the developing countries are the net importers; and (4) the 17 stock markets constitute different local financial networks, which may be related to economic conditions and geographical location.     

FDI溢出对高经济产出区的增长影响

运用空间Durbin模型和极大似然估计技术,以1991-2012年大长三角25城市和大珠三角21城市面板数据,对比检验了FDI溢出与城市生产率间的基本关系。发现：FDI对本地城市增长正效应显著存在并随时间增强,其空间溢出显著但在二地区行为相反;空间依赖在城市生产率增长中有增强趋势,但在二地区方向相异;FDI提高了二地区城市增长的条件收敛速度;空间溢出在二地区的核心和外围都存在但表现各异并有不同演变。上述结论对于二地区引进FDI和促进城市发展具有重要政策含义。     

Policy spillover and regional linkage characteristics of the real estate market in China's urban agglomerations

The main purpose of this study is to determine the spillover effect of real estate regulatory policies released by core cities on the surrounding cities in major urban agglomerations based on regional linkage characteristics of China's real estate market. In this study, real estate transaction data of 157 cities were selected from 11 major urban agglomerations. Agglomeration's housing transaction volatility and spillover effect caused by the core city's regulatory policies were simulated by integrating spatial and temporal analysis model, event analysis, and symbolic time series analysis. The findings showed that (1) the regional linkage of the real estate market in the Harbin–Changchun and Middle–South Liaoning, Middle Reaches of the Yangtze River, Yangtze River Delta, Pearl River Delta, and West Side of the Straits agglomerations were remarkably tight and the core cities' policy spillover effect was significant, of which the house purchase limitation and credit limitation policies had the widest influence; (2) the regional linkage of the real estate market in the Beijing–Tianjin–Hebei agglomeration, Shandong Peninsula, Guanzhong Plain, and Chengdu–Chongqing agglomerations was relatively weaker, but the core cities' policies of market regulation and taxation had certain spillover effect; (3) there were significant differences in the spillover effects of different types of policies in different urban agglomerations; (4) generally, the core cities' policy spillover often reduced the changing characteristics of the real estate market and made it more ordered with more certainty in the whole agglomeration, with the exception of the Beijing–Tianjin–Hebei, West Side of the Straits, and Chengdu–Chongqing agglomerations.     

Energy footprint of the city: Effects of urban land use and transportation policies

Urban land use and transportation policies have dramatic effects on the density and spatial distribution of residences in large cities. Effects of these policies have been analyzed using numerical urban simulation models. At the same time, the US Energy Information Administration’s Residential Energy Consumption Survey has allowed researchers to investigate the relation between household energy consumption and characteristics of housing units.This paper links these two lines of inquiry by demonstrating how simulation results on the implications of land use and transportation policies for the spatial form of cities can be used to compute implications for energy consumption. The resulting Urban Energy Footprint Model, “UEFM,” allows one to trace the implications of a change in land use zoning or transportation policy through its effects on housing markets and residential location to the resulting changes in energy use for residential and commuting purposes – i.e. to understand the energy footprint of transportation, housing, and land use policies. Accordingly, the UEFM provides, perhaps for the first time, a link between urban and energy economics, and can allow measurement of rebound effects of energy policies in a more general equilibrium context.     

国际知识资本溢出对全要素生产率的影响——基于中国省级面板数据实证研究

国际知识资本溢出是推动全要素生产率的重要引擎。基于中国30个省份2000—2018年面板数据,利用双向固定效应模型研究进口溢出的知识资本和FDI溢出的知识资本对全要素生产率的影响。研究结果表明:两类国际知识资本均对全要素生产率有显著促进作用,进口溢出的知识资本促进弹性大于FDI溢出的知识资本,但在加入交叉项后两者存在显著的抑制效应,这主要是由于跨国公司内部贸易的技术封锁导致;国际知识资本对全要素生产率的影响具有区域异质性,对东部的促进效应明显优于中西部。这一发现为我国更高效地利用国际知识资本进行区域间协调高质量发展提供了理论依据。     

Speed of adjustment in cointegrated systems

This paper discusses summary measures for the speed of adjustment in possibly cointegrated Vector Autoregressive Processes (VAR). In particular we propose long-run half-lives, based on interim and total multipliers. We discuss their relation with Granger-noncausality and other types of half-life, which are shown to convey different information, except in the univariate AR(1) case. We present likelihood-based inference on long-run half-lives, regarded as discrete functions of parameters in the VAR model. It is shown how asymptotic confidence regions can be defined. An empirical illustration concerning speed of adjustment to purchasing-power parity is provided.     

Risk behavior in the presence of government programs

Our paper assesses the impacts of the 1996 US Farm Bill on production decisions. We apply the expected utility model to analyze farmers’ behavior under risk and assess how farmers’ production decisions change in the presence of government programs. Specifically, we empirically evaluate the relative price and the risk-related effects of farm policy changes at the intensive margin of production, as well as the extra value that these policies add to farmers’ certainty equivalent. We use farm-level data collected in Kansas to estimate the model. We find evidence that decoupled government programs have only negligible impacts on production decisions.     

Fiscal Policies and Credit Regimes: A TVAR Approach

This work investigates how the state of credit markets affects the impact of fiscal policies. We estimate a threshold vector autoregression (TVAR) model on US quarterly data for the period 1984–2010. We employ the spread between BAA‐rated corporate bond yield and 10‐year treasury constant maturity rate as a proxy for credit conditions. We find that the response of output to fiscal policy shocks is stronger and more persistent when the economy is in the ‘tight’ credit regime. Fiscal multipliers are significantly different in the two regimes: they are abundantly and persistently higher than one when firms face increasing financing costs, whereas they are feebler and often lower than one in the ‘normal’ credit regime. The results appear to be robust to different model specifications, fiscal foresight, alternative threshold variables, different measure of variables and sample periods. Copyright © 2014 John Wiley & Sons, Ltd.     

How useful is an Asian Currency Unit (ACU) index for surveillance in East Asia?

An Asian Currency Unit (ACU) index is constructed using an alternative procedure which minimizes a basket or portfolio of assets expressed in terms of national currencies. Using this estimated ACU index and an ACU deviation indicator, the main finding of this study based on the current trajectory of East Asian currencies relative to this regional ACU benchmark is that there is a formation of two contrasting groups of countries in the region—one group of strong currencies and one group of weak currencies. We emphasize that this contrasting trajectory in East Asian intra-regional exchange rates implies disturbed competitive trading relationships in the region, which may result in wasteful beggar-thy-neighbor policies. As emphasized in other recent studies (e.g., Kawai and Takagi, 2012), the region needs a framework for exchange rate policy coordination that will promote intra-regional exchange rate stability. We suggest two important ways in which the region can capitalize on using an ACU index for surveillance purposes in the immediate term. One way is to assess “over- and undervaluation” of individual currencies from the regional ACU average. The other is to use it as a monitoring device for excessive flows of international capital within the region.     

GROWTH OF RURAL US NON‐FARM PROPRIETORS WITH A FOCUS ON AMENITIES

In this research we explore how local amenities relate to proprietorship growth by merging two lines of work: amenities and rural growth and the drivers of proprietorship and small business growth. We do so to examine what role, if any, different types of amenties play in promoting the growth of small businesses in rural USA. Using data for rural US counties we explore the role of natural and built amenities in the growth of rural non‐farm proprietorships between 2000 and 2008 by employing a spatial Durbin model to account for both spatial dependency in the data and to explicitly model spatial spillover effects. The results offer evidence that proprietorship growth is spatially clustered, spatial spillover effects matter, and proprietorship growth is higher in those areas with particular climate attributes. That is, the effect of climate on quality of life may be enough to attract individuals who wish to start new firms.     

Spillover effects in oil-related CDS markets during and after the sub-prime crisis

This paper investigates the return and volatility spillover effects across oil-related credit default swaps (CDSs), the oil market, and financial market risks for the US during and after the subprime crises. The empirical analysis is based on monthly return and realized volatility data from February 2004 to April 2020. We estimate both static and dynamic generalized dynamic spillover measures based on vector autoregressive (VAR) models. Our full sample empirical findings show that the oil market is the primary source of risk transmission for all the oil-related credit default swaps, while the bond market is the highest source of risk transmission to the stock market and vice versa. We also provide evidence that the regulated monopoly US utility sector has the least role in volatility transmission. Furthermore, the bailout program conducted by the US Treasury and Federal Reserve helped stabilize the US financial market through the purchase of toxic assets after the subprime financial crisis. We find strong evidence that the federal funds rate hike cycles lessen total risk transmission throughout the US bond market. Finally, our findings assert that oil price shocks have a significant effect on the oil-related CDSs in some sub-periods via the demand and supply transmission channels.