Regional resilience and fat tails: A stochastic analysis of firm growth rate distributions of German regions
AbstractThis paper breaks down the distributional analysis of firm growth rates to the domain of regions. Extreme growth events, i.e. fat tails, are conceptualized as an indicator of competitive regional environments which enable processes like structural adaptation or technological re-orientation. An understanding of the heterogeneous dynamics at the level of firms, the â€œturbulence underneath the big calmâ€ (Dosi et al. 2012), provides a micro-funded empirical perspective on the evolutionary dimension of regional resilience. Therefore, the flexible Asymmetric Exponential Power (AEP) density is fitted to firm data for each German region during the years of economic downturn (2008-2010). Peculiarities of employment growth are explicitly taken into account by applying a new maximum likelihood estimation procedure with order statistics (Bottazzi 2012). The estimated parameters, which measure the tailsâ€™ fatness, are then related to various region-specific factors that are discussed in the literature on regional resilience. Results show that firm growth rate distributions remain asymmetric and fat tailed at the spatially disaggregated level, but their shape markedly differ across regions. Extreme growth events, i.e. firm-level turbulences, are primarily a phenomenon of economically better performing regions at the aggregate level and further intensified by the presence of a higher qualified workforce. Besides, the fatness of the tails depends on the regionsâ€™ industrial structure.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Philipps University Marburg, Department of Geography in its series Working Papers on Innovation and Space with number 2014-01.
Length: 23 pages
Date of creation: 29 Jan 2014
Date of revision:
regional resilience; firm growth; growth rates distributions; fat tails; asymmetric exponential power; evolutionary perspective;
Find related papers by JEL classification:
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-GEO-2014-02-02 (Economic Geography)
- NEP-SBM-2014-02-02 (Small Business Management)
- NEP-URE-2014-02-02 (Urban & Real Estate Economics)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christoph Mengs).
If references are entirely missing, you can add them using this form.