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Macroeconomic effects of the geography of knowledge production: EcoRET, a macroeconometric model with regionally endogenized technological change for Hungary

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  • Hans Joachim Schalk
  • Attila Varga

Abstract

Mainstream economic thinking is still characterized by a predominantly a-spatial theoretical structure. Though economists are able to model the impacts of capital, labor or technology on output, employment or prices at both macro and micro levels, our methodological tools are still not sensitive to the influence of geography on the way inputs contribute to production. Empirical investigations of the relationship between agglomeration and macroeconomic growth are still relatively rare in the literature. It is also a very recent advancement that geographical structure is modeled simultaneously with other variables in macroeconomic models. This paper introduces EcoRET the macroeconometric model with regionally endogenized technological change for Hungary. The unique feature of EcoRET is that it incorporates spatial structure into a traditional macroeconometric model by a regional block of technological change. The model can be applied for policy simulations on the macroeconomic effects of changing geographical distribution of regional financial supports. JEL classification: O31, H41, O40 Keywords: endogenous growth theory, new economic geography, knowledge spillovers, total factor productivity, agglomeration economies

Suggested Citation

  • Hans Joachim Schalk & Attila Varga, 2004. "Macroeconomic effects of the geography of knowledge production: EcoRET, a macroeconometric model with regionally endogenized technological change for Hungary," ERSA conference papers ersa04p521, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa04p521
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    References listed on IDEAS

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    1. Zoltan J. Acs & Attila Varga, 2008. "Entrepreneurship, Agglomeration and Technological Change," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 24, pages 341-352, Edward Elgar Publishing.
    2. A. Varga, 2006. "Spatial Knowledge Spillovers and University Research: Evidence from Austria," Springer Books, in: Innovation, Networks, and Knowledge Spillovers, chapter 10, pages 211-232, Springer.
    3. Zoltan Acs & Attila Varga, 2004. "Entrepreneurship, geography and technological change," ERSA conference papers ersa04p516, European Regional Science Association.
    4. Marjolein C.J. Caniëls, 2000. "Knowledge Spillovers and Economic Growth," Books, Edward Elgar Publishing, number 1936.
    5. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    6. Nauro F. Campos & Abrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 793-836, September.
    7. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-1171, September.
    8. Philippe Aghion & Peter Howitt, 1997. "Endogenous Growth Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011662, December.
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    Cited by:

    1. Christophe Heyndrickx & Natalia Tourdyeva & Victoria Alexeeva-Talebi, 2011. "The SUSTRUS model: a CGE model on regional level for sustainability policies in Russia," ERSA conference papers ersa11p1565, European Regional Science Association.

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    More about this item

    Keywords

    endogenous growth theory; new economic geography; knowledge spillovers; total factor productivity; agglomeration economies;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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