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Culture Shocks and Consequences: the connection between the arts and urban economic growth



Is there a relationship between local arts and culture production and local prosperity that is permanent rather than transitory? The answer to this question determines whether arts and culture production generates economic growth or a temporary `multiplier' effect that diminishes over time. We argue that despite the obvious public policy interest in the subject there has been no fully satisfactory empirical analysis of this question. In this paper we provide a model that allows us to think systematically about the problem and an empirical methodology capable of testing relevant hypotheses concerning possible answers to the question. We identify data to which these methods can be applied, using per capita GDP and expenditure levels of arts and culture production by not-for-profit organizations in US urban areas. Our analysis suggests that the impact of arts and culture production is not transitory. Shocks to local arts and culture production generate impacts that alter the local economy and change steady-state GDP.

Suggested Citation

  • Peter Pedroni & Stephen Sheppard, 2012. "Culture Shocks and Consequences: the connection between the arts and urban economic growth," Department of Economics Working Papers 2012-04, Department of Economics, Williams College.
  • Handle: RePEc:wil:wileco:2012-04

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    References listed on IDEAS

    1. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
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    Cited by:

    1. Annie Tubadji & Vassilis Angelis & Peter Nijkamp, 2014. "Local culture and resistance to shocks in economic forecasts: a case study of Greece," Economics and Business Letters, Oviedo University Press, vol. 3(4), pages 298-308.

    More about this item


    Arts; Economic Growth; Non-profit organizations;

    JEL classification:

    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models


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