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A Spatial Econometric Analysis of Geographic Spillovers and Growth for European Regions, 1980-1995

  • BAUMONT, Catherine

    ()

    (LATEC - CNRS UMR 5118 - Université de Bourgogne)

  • ERTUR, Cem

    ()

    (LATEC - CNRS UMR 5118 - Université de Bourgogne)

  • LE GALLO, Julie

    ()

    (LATEC - CNRS UMR 5118 - Université de Bourgogne)

The aim of this paper is to consider the geographical dimension of data in the estimation of the convergence of European regions and to emphasize geographic spillovers in regional economic growth phenomena. In a sample of 138 European regions over the 1980-1995 period, we show that the unconditional b -convergence model is misspecified due to spatially autocorrelated errors. Its estimation by Ordinary Least Squares leads to inefficient estimators and invalid statistical inference.Using spatial econometric methods and a distance based weight matrix we then estimate an alternative specification, which takes into account the spatial autocorrelation detected and leads to reliable statistical inference. Moreover this specification allows us to highlight a geographic spillover effect: the mean growth rate of a region is positively influenced by those of neighboring regions. We finally show by a simulation experiment that a random shock affecting a given region propagates to all the regions of the sample.

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Paper provided by LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne in its series LATEC - Document de travail - Economie (1991-2003) with number 2001-04.

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Length: 26 pages
Date of creation: Feb 2001
Date of revision:
Handle: RePEc:lat:lateco:2001-04
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  1. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April.
  2. Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1, December.
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  3. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
  4. Palivos, Theodore & Wang, Ping, 1996. "Spatial agglomeration and endogenous growth," Regional Science and Urban Economics, Elsevier, vol. 26(6), pages 645-669, December.
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  7. Quah, Danny, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis," CEPR Discussion Papers 820, C.E.P.R. Discussion Papers.
  8. BAUMONT, Catherine & ERTUR, Cem & LE GALLO, Julie, 2000. "Convergence des régions européennes. Une approche par l'économétrie spatiale," LATEC - Document de travail - Economie (1991-2003) 2000-03, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
  9. Fingleton, B & McCombie, J S L, 1998. "Increasing Returns and Economic Growth: Some Evidence for Manufacturing from the European Union Regions," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 89-105, January.
  10. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  11. Anselin, Luc & Bera, Anil K. & Florax, Raymond & Yoon, Mann J., 1996. "Simple diagnostic tests for spatial dependence," Regional Science and Urban Economics, Elsevier, vol. 26(1), pages 77-104, February.
  12. LE GALLO, Julie & ERTUR, Cem, 2000. "Exploratory spatial data analysis of the distribution of regional per capita GDP in Europe, 1980-1995," LATEC - Document de travail - Economie (1991-2003) 2000-09, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
  13. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
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  15. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  16. Paul R. Krugman, 1991. "First Nature, Second Nature, and Metropolitan Location," NBER Working Papers 3740, National Bureau of Economic Research, Inc.
  17. Kelejian, Harry H & Prucha, Ingmar R, 1999. "A Generalized Moments Estimator for the Autoregressive Parameter in a Spatial Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 509-33, May.
  18. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-94, September.
  19. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  20. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
  21. Evans, Paul, 1996. "Using cross-country variances to evaluate growth theories," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1027-1049.
  22. Krugman, Paul, 1993. "On the number and location of cities," European Economic Review, Elsevier, vol. 37(2-3), pages 293-298, April.
  23. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
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