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Firm heterogeneity and regional business cycles differentials

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  • Roberto Basile
  • Sergio de Nardis
  • Carmine Pappalardo

Abstract

We analyze the effect of firm heterogeneity on regional business cycle differentials. Using monthly firm-level data for Italy and estimating discrete-response models, we document sizeable and countercyclical differences in amplitude between the Northern and the Southern business cycles. We explore the role of sectoral mix and several firm-specific factors in explaining regional business cycle gaps. Results suggest that regional differences in sectoral composition are not responsible for these discrepancies, whereas firm-level heterogeneity explains 50% of the North–South gap. These results are robust to controlling for (i) firm fixed effects, (ii) spatial fixed effects and (iii) simultaneity bias.

Suggested Citation

  • Roberto Basile & Sergio de Nardis & Carmine Pappalardo, 2014. "Firm heterogeneity and regional business cycles differentials," Journal of Economic Geography, Oxford University Press, vol. 14(6), pages 1087-1115.
    • Handle: RePEc:oup:jecgeo:v:14:y:2014:i:6:p:1087-1115.
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    Cited by:

    1. Carlo Gianelle & Letizia Montinari & Simone Salotti, 2017. "Interregional Trade, Specialization, and the Business Cycle: Policy Implications for the EMU," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 13(1), pages 1-27, May.
    2. Jürgen Bierbaumer-Polly & Werner Hölzl, 2016. "Business Cycle Dynamics and Firm Heterogeneity. Evidence for Austria Using Survey Data," WIFO Working Papers 504, WIFO.
    3. Alessandro Girardi & Marco Ventura, 2021. "Measuring credit crunch in Italy: evidence from a survey-based indicator," Annals of Operations Research, Springer, vol. 299(1), pages 567-592, April.
    4. Wenzel, Lars, 2013. "Forecasting regional growth in Germany: A panel approach using business survey data," HWWI Research Papers 133, Hamburg Institute of International Economics (HWWI).
    5. Girardi, Alessandro & Ventura, Marco & Margani, Patrizia, 2018. "An Indicator of Credit Crunch using Italian Business Surveys," MPRA Paper 88839, University Library of Munich, Germany.
    6. Soomi Lee & Shu Wang, 2023. "Impacts of political fragmentation on inclusive economic resilience: Examining American metropolitan areas after the Great Recession," Urban Studies, Urban Studies Journal Limited, vol. 60(1), pages 26-45, January.
    7. Petraglia, Carmelo & Pierucci, Eleonora & Scalera, Domenico, 2020. "Interregional redistribution and risk sharing through public budget. The case of Italy in times of crisis (2000–2016)," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 162-169.
    8. Fazio, Giorgio & Piacentino, Davide, 2018. "Convergence analysis for hierarchical longitudinal data," Economic Modelling, Elsevier, vol. 73(C), pages 89-99.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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