The role of spatial interdependence in local government cost efficiency: An application to waste Italian sector

The paper aims to study the effect of spatial interdependence, among nearby municipalities, on public services efficiency. An empirical analysis on the waste disposal service in 4250 Italian municipalities was carried out to evaluate the efficiency of waste management expenditure, once the impact of positive/negative externalities, of neighbouring local governments, on efficiency levels is isolated. From a methodological point of view, our study extends the spatial stochastic frontier methodology proposed in Fusco & Vidoli (2013) usable only for production analysis, allowing to admit into a cost frontier the spatial autocorrelation among residuals. Ignoring spatial autocorrelation leads to inferential problems violating one of the most important assumption of classical regression models: the non-correlation of the residuals. We found a significant spatial interdependence among neighbouring municipalities in term of cost efficiency, that, thanks to the methodology proposed, has been isolated allowing a discussion on the specific efficiency of municipalities. These results may suggest the need to consider proximity effects in future investigations about the efficiency of waste management and, more generally, of public services.     

Spatial dependence,agglomeration externalities and the convergence of carbon productivity

By combining the extended slack based measurement (SBM) model directed distance function and the meta-constrained production function to measure China's carbon productivity, this paper studies the spatial spillover effects and convergence characteristics of carbon productivity. According to the results, carbon productivity showed obvious viscosity and spatial dependence in adjacent regions. China's carbon productivity had spatial conditional β-convergence and club convergence effects. Specifically, agglomeration externalities constituted an important mechanism for increasing carbon productivity and realizing the convergence thereof. Different agglomeration forms under different agglomeration degrees corresponded to different carbon productivity levels; with an increase in the degree of agglomeration, the emission reduction effect of specialized agglomeration diminished, while that of diversified agglomeration increased. Furthermore, depending on suitable agglomeration degrees, the emission reduction effect of specialized agglomeration could coexist with that of diversified agglomeration. In terms of regional distribution, in East China, both specialized agglomeration and diversified agglomeration presented relatively significant emission reduction effects. In contrast, in Central China and West China, only specialized agglomeration showed a weak emission reduction effect.     

A model of public sector wage determination

The paper presents an empirical model of wage determination in the public sector that leads to the specification of a system of interrelated wage equations for municipal employees, which allows for occupational and geographic interdependence of wages. The model also considers the influence of public employee unions, municipal government form, and monopsony power of local governments on the wages of municipal employees. Several variants of the derived system of equations are estimated based upon 1967 cross-section data for 478 cities, and the policy implications of the results are discussed.     

空间加权矩阵设置与空间面板参数估计效率

总结了常用的空间加权矩阵的一般构建方法和研究领域内新提出的空间加权矩阵的构建方法,从宏观与微观层面,量化分析了空间加权矩阵设置对于空间面板参数估计效率、空间效应识别的影响效应。结论表明：宏观数据层面,随着空间加权矩阵复杂程度的提高,无论是空间面板固定效应模型还是空间面板随机效应模型,参数估计的有效性与一致性都显著提高并且广义矩参数估计方法优于拟极大似然估计方法,复合的空间加权矩阵条件下,拉格朗日乘子检验方法的功效更高;微观数据层面,回归结果表明四种不同类型的空间加权矩阵的设置,对于聚集外部性引致的企业全要素生产率增长的空间边界的识别具有显著影响,复合的空间加权矩阵更有效。     

Does Evidence on Regional Economic Convergence Depend on the Estimation Strategy? Outcomes from Analysis of a Set of NUTS2 EU Regions

Abstract

The regional economic convergence/divergence issue has been discussed extensively recently, but results obtained are not always interpretable unequivocally as a consequence of the different estimation strategies used. As it is widely recognized, the most common theoretical framework applied to measure the speed of economic convergence among countries or regions remains the β-convergence approach, linked to the neoclassical Solow model. There have been many attempts to consider variations of the basic cross-sectional specification ranging from panel data models to Bayesian spatial econometric techniques. The application of spatial econometric methodologies is an essential tool for proper statistical inference on regional data. In this context, the aim of this paper is to connect the different results obtained in the literature. More specifically, we address whether or not evidence on convergence depends upon the estimation strategy, by taking the same set of data and systematically comparing the results obtained from different estimation strategies. The results from a set of NUTS2 EU regions conclude that both the model implied by the cross-sectional analysis and the one referring to the space-time dynamics incorporated in the panel specification point to convergence. The concept of convergence implied is, however, quite different, as demonstrated throughout the paper.     

Modelling and forecasting government bond spreads in the euro area: A GVAR model

This paper proposes an extension to Global Vector Autoregressive (GVAR) models to capture time-varying interdependence among financial variables. Government bond spreads in the euro area feature a time-varying pattern of co-movement that poses a serious challenge for econometric modelling and forecasting. This pattern of the data is not captured by the standard specification that model spreads as persistent processes reverting to a time-varying mean determined by two factors: a local factor, driven by fiscal fundamentals and growth, and a global world factor, driven by the market’s appetite for risk. This paper argues that a third factor, expectations of exchange rate devaluation, gained traction during the crises. This factor is well captured via a GVAR that models the interdependence among spreads by making each country’s spread function of global European spreads. Global spreads capture the exposure of each country’s spread to other spreads in the euro area in terms of the time-varying ‘distance’ between their fiscal fundamentals. This new specification dominates the standard one in modelling the time-varying pattern of co-movements among spreads and the response of euro area spreads to the Greek debt crisis.     

空间外部性、比较优势与制造业集聚

本文综合传统比较优势和外部性因素在新经济地理框架下建立理论和计量模型研究了我国284个地级市制造业集聚的影响机制及其地区差异。结果表明,传统比较优势仍是影响制造业区位的重要因素;各级城市之间存在明显的要素供给与市场需求的空间关联性,且已超过传统比较优势成为制造业集聚的主要来源;传统比较优势与空间外部性对制造业集聚的作用分别由西到东和由东到西依次递减。该结果为进一步促进区际产业转移和协调发展提供了重要启示。     

Local trade networks and spatially persistent unemployment

This paper studies the effects of local trade networks on the spatial distribution of employment in a model that allows for effective demand externalities as well as home bias. It is shown that, if labor can be hired in continuous quantities, then the long run spatial distribution of employment is uniform, and independent of any trade network topology. When labor has binary support, however, local trade networks are found to generate spatial unemployment clusters which can persist indefinitely.     

A life-cycle model of repeat migration

"This paper develops a theoretical model which analyzes the impact of the spatial distribution of a family's stock of human capital on its migration decision. This stock of human capital is composed of location-specific and non-specific human capital. The distribution of location-specific capital is a function of the residential and employment history of the family, while non-specific capital is distributed evenly over space. An empirical specification of the model is derived and estimated with a [U.S.] data set consisting of a number of cases from the Michigan Panel Study of Income Dynamics."     

Local Geographic Spillovers between University Research and High Technology Innovations

This paper re-examines the empirical evidence on the degree of spatial spillover between university research and high technology innovations. The familiar Griliches–Jaffe knowledge production function is estimated at both the state and the metropolitan statistical areas (MSA) level and extended with more precise measures of spatial spillover. Alternatives based on the gravity potential and covering indices are formulated for Jaffe's “geographical coincidence index” and found to provide strong evidence of local spillovers at the state level. At the MSA level, a distinction is made between research and development activities and university research in the MSA and in the surrounding counties. Evidence is found of local spatial externalities between university research and high technology innovative activity, both directly and indirectly via private research and development.     

Socially optimal and equilibrium distributions of office activity: Models with exogenous and endogenous contacts

Two models of the location of office activities within a city are developed. In the first model, the pattern of interoffice contacts is specified exogenously as has been traditional in the literature. In the second model the contact patterns as well as the distribution of firms are endogenous. For both models, the market equilibrium distribution of office activities is not socially optimal. Two sources for this market failure are identified in these models: (1) agglomeration economies and (2) transactional externalities arising from firm interdependence and mobility.     

Identification in a model of sorting with social externalities and the causes of urban segregation

This paper discusses nonparametric identification in a model of sorting in which location choices depend on the location choices of other agents as well as prices and exogenous location characteristics. In this model, demand slopes and hence preferences are not identifiable without further restrictions because of the absence of independent variation of endogenous composition and exogenous location characteristics. Several solutions of this problem are presented and applied to data on neighborhoods in US cities. These solutions use exclusion restrictions, based on either subgroup demand shifters, the spatial structure of externalities, or the dynamics of prices and composition in response to an amenity shock. The empirical results consistently suggest the presence of strong social externalities, that is a dependence of location choices on neighborhood composition.     

Price and quantity competition among heterogeneous suppliers with two-part pricing: applications to clubs, local public goods, networks, and growth controls

Models of club goods, local public goods, and growth controls appear to have theoretical structures distinct from usual oligopoly models. This article shows, however, that they are special cases of a generalized oligopoly model that incorporates the possibility of two-part pricing and externalities between consumers (either congestion or network externalities). Our generalized two-part pricing model not only serves as a synthesis of a wide range of models but also allows us to obtain several new results on equilibrium prices. Another advantage of our model is that it can be interpreted as a reduced form of more complicated models that have spatial structures. This facilitates extension to the case where firms are heterogeneous and the number of firms is arbitrary.     

Congestible public goods and local indeterminacy: A two-sector endogenous growth model

This paper shows that the congestible public goods can generate local indeterminacy in a two-sector, constant-return human capital enhanced growth model. While the productive public good exerts positive sector-specific externalities, the congestion effect generates negative aggregate externalities. The sector-specific externalities alone arising from productive public goods cannot establish local indeterminacy without the combination of negative externality in a model with social constant return technology. Congestible public good generates local indeterminacy if the degree of productive public good externality and the degree of congestion effect are large enough. The condition for indeterminacy is independent of the factor intensity rankings. The conditions are quantitatively assessed and the required parameter values for the degrees of public good externality and congestion are consistent with the estimated values in existing literature.     

Regional economic-demographic forecasting models: A case study of the Washington and Hawaii models

This paper presents a case study of two regional economic-demographic models: the Washington Projection and Simulation Model and the Hawaii Economic-Population Projection and Simulation Model. A discussion of model specification focusses attention on the interdependence of economic and demographic variables. Ex ante prediction tests demonstrate the models' forecasting capabilities. Simulations with the Washington model are conducted to show more clearly the interaction between economic and demogrphic activity in a region.     

Specification and estimation of spatial econometric models: A discussion of alternative strategies for spatial economic modelling

The semantical insufficiency of (spatial) economic theories necessitates the making of additional assumptions — thereby introducing substantial specification uncertainty — in order to arrive at a fully specified econometric model. The traditional or current approach to econometric modelling treats specification uncertainty inadequately. This proposition is illustrated by two well-known examples from the spatial economic literature. Two alternative specification strategies for spatial economic modelling — designed to improve the current spatial econometric modelling approach — are proposed. One of these strategies is used for a specification analysis of agricultural output in Eire.     

A dynamic model of urban land use with externalities

A dynamic model of the urban land and building market is proposed which explicitly incorporates endogenous spatial externalities. Using stochastic optimization the model estimates for each period first the supply of building space and then the spatial allocation of activities. Prices for buildings and land are endogenous. The development of the urban area depends on the demand for labor in basic industries. The dynamics of the system is controlled also by the lagged response to endogenous variables. Thus, both the level of externalities, which affect the allocation of activities, and rents, which influence the location of the building supply, are based on the results of the preceding period.     

Entrepreneurship among married couples in the United States: A simultaneous probit approach

This article proposes a simultaneous probit equation framework to analyse the business ownership patterns of married couples in the United States. A structural model of knowledge spillovers within couples is formulated and estimated. Empirical analysis reveals significant and substantial positive interdependence of business ownership propensities within couples. This is consistent with a process in which both male and female spouses receive positive knowledge transfers from the other. Conversely, there is less support for alternative explanations of interdependent occupational choices based on assortative mating, role model effects, risk diversification, or intra-household wealth transfers. I conclude that the conventional practice of ignoring occupational interdependence can generate misleading conclusions about the determinants of business ownership in America.     

Optimal policies in cities with congestion and agglomeration externalities: Congestion tolls,labor subsidies,and place-based strategies

This paper develops a spatial general equilibrium model that accommodates both congestion and agglomeration externalities, while firms’ and households’ land-use decisions are endogenous across continuous space. Focusing on the interaction between externalities and land use patterns, we examine the efficiencies of first-best policies and second-best pricing and place-based strategies using numerical simulations. A first-best policy must combine both Pigouvian congestion tolling (PCT) and Pigouvian labor subsidies (PLS) instruments, or design an optimal toll (or subsidy) internalizing agglomeration externalities (or congestion externalities). We also examine second-best pricing policies if only one instrument is adopted. Congestion pricing policies alone (e.g., a partial PCT or a flat-rate toll) can improve social welfare only in heavy-congestion cities, and their welfare gains may be insignificant (e.g., below 10% of the welfare improvement achieved by first-best policies). In contrast, second-best labor subsidy policies alone are a more effective alternative to first-best policies. As to place-based policies, the firm cluster zoning (FCZ) regulation is more efficient than the urban growth boundary (UGB) policy. UGBs only have small effects on the agglomeration economy but could worsen land market distortions via residential rent-escalation effects. These findings suggest that it is important to internalize business land use decisions and relax monocentricity assumptions, in order to appreciate the interplay of both urban externalities, since spatial adaptations to policy interventions can distort system efficiencies.     

Modelling the process of job search

This paper is concerned with the specification and estimation of a genuinely structural but static model of individual search behaviour in which the estimated reservation wage actually satisfies the optimality condition. The identification of the parameters of interest is achieved by the a priori specification of the vacancy-wage distribution. The model is estimated using the data from the 1978–1979 D.H.S.S. Cohort Study of the Unemployed. The estimated parameters reflect, in the main, our prior views and generate a number of interesting results. In particular the elasticity of unemployment spell duration with respect to unemployment benefits is estimated to be around 0.18–0.26.