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Spatial dependence and Kaldor's laws: Evidence for the European regions

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  • Jordi Pons-Novell

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  • Elisabet Viladecans-Marsal

Abstract

In this paper we provide an outline of Kaldor's growth model and tests its relevance to the economic experience of European regions during the 1984-1992 period. The Kaldor's first law asserts that manufacturing is the engine of economic growth. The second proposition, also known as Verdoorn's law, states that there is a strong positive relation between the productivity growth in manufacturing and the output growth of manufacturing. The third law suggests that overall productivity growth is positively related to output growth in manufacturing and negatively related to the employment of non manufacturing sectors. The empirical results, corrected for the presence of spatial autocorrelation, indicates that Kaldor's second and third laws are compatible with the economic growth of European regions during the period 1984-1992. Keywords: Kaldor's laws, regional economics, spatial autocorrelation

Suggested Citation

  • Jordi Pons-Novell & Elisabet Viladecans-Marsal, 1998. "Spatial dependence and Kaldor's laws: Evidence for the European regions," ERSA conference papers ersa98p55, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa98p55
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    1. Nancy J. Wulwick, 1991. "Did the Verdoorn Law Hang on Japan," Eastern Economic Journal, Eastern Economic Association, vol. 17(1), pages 15-20, Jan-Mar.
    2. Paelinck, J., 1978. "Spatial econometrics," Economics Letters, Elsevier, vol. 1(1), pages 59-63.
    3. Drakopoulos, Stavros & Theodossiou, Ioannis, 1991. "Kaldorian Approach to Greek Economic Growth," MPRA Paper 48989, University Library of Munich, Germany.
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