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Using Spatial Econometrics to Analyze Local Growth in Sweden

  • Johan Lundberg

    ()

This paper investigates factors that determine the average income growth and net migration rates in Swedish municipalities during the period 1981 to 1999. The main issue is to test the hypothesis that, conditional on a set of other possible determinants of regional growth, the growth rate in one municipality is affected by the growth rates in its neighboring municipalities. We also test the hypothesis of conditional convergence, that is, the hypothesis that initially 'poorer' regions tend to grow faster than initially 'richer' regions conditional on the other explanatory variables in the model. We find a positive correlation between net migration rates in neighboring municipalities, which suggests that net migration tend to 'spill over' to neighboring municipalities. When it comes to average income growth, our results indicate spatial dependence in the error terms during the 1980's. Such dependence is important in the sense that it indicates that shocks into the system not only affect the municipality where the shock has its origin but spread across the country. In addition, and in contrast to previous empirical findings based on Swedish data, we do not find any clear evidence in favour of the hypothesis of conditional convergence. Instead, our results predict conditional divergence between municipalities located in the Stockholm region throughout the period and also for municipalities outside the Stockholm region during the 1990's.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p25.

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Date of creation: Aug 2004
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Handle: RePEc:wiw:wiwrsa:ersa04p25
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  1. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
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  12. Helms, L Jay, 1985. "The Effect of State and Local Taxes on Economic Growth: A Time Series-Cross Section Approach," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 574-82, November.
  13. Borjas, George J. & Bronars, Stephen G. & Trejo, Stephen J., 1992. "Self-selection and internal migration in the United States," Journal of Urban Economics, Elsevier, vol. 32(2), pages 159-185, September.
  14. Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
  15. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
  16. Treyz, George I, et al, 1993. "The Dynamics of U.S. Internal Migration," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 209-14, May.
  17. Lundberg, Johan, 2003. "On the Determinants of Average Income Growth and Net Migration at the Municipal Level in Sweden," The Review of Regional Studies, Southern Regional Science Association, vol. 33(2), pages 229-53.
  18. Bernard Fingleton, 2001. "Equilibrium and Economic Growth: Spatial Econometric Models and Simulations," Journal of Regional Science, Wiley Blackwell, vol. 41(1), pages 117-147.
  19. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
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  21. Marinella Terrasi, 1999. "Convergence and divergence across Italian regions," The Annals of Regional Science, Springer, vol. 33(4), pages 491-510.
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