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New economic geography in Germany : testing the Helpman-Hanson model

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  • Brakman, Steven
  • Garretsen, Harry
  • Schramm, Marc

Abstract

In this paper we find evidence that the new economic geography approach is able to describe and explain the spatial characteristics of an economy, in our case the German economy. Using German district data we estimate the structural parameters of a new economic geography model as developed by Helpman (1998) and Hanson (1998) and we find confirmation for a spatial wage structure. The advantage of the Helpman-Hanson model is that it incorporates the fact that agglomeration of economic activity increases the prices of local (non-tradable) services, like housing. This model thereby provides an intuitively appealing spreading force that allows for less extreme agglomeration patterns than predicted by the bulk of new economic geography models. Based on different estimation strategies and taking a number of features of the re-unified German economy into account, we do not only test for the spatial distribution of wages but also for the spatial structure with respect to German unemployment, employment and land prices.

Suggested Citation

  • Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2002. "New economic geography in Germany : testing the Helpman-Hanson model," HWWA Discussion Papers 172, Hamburg Institute of International Economics (HWWA).
  • Handle: RePEc:zbw:hwwadp:26183
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    6. Gordon H. Hanson, 2000. "Scale Economies and the Geographic Concentration of Industry," NBER Working Papers 8013, National Bureau of Economic Research, Inc.
    7. Sinn, Hans-Werner, 2002. "Germany's Economic Unification: An Assessment after Ten Years," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 113-128, February.
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    11. Michael Roos, "undated". "Wages and Market Potential in Germany," Discussion Papers in Economics 00_09, University of Dortmund, Department of Economics.
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    15. repec:hhs:iuiwop:430 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Niebuhr, Annekatrin & Stiller, Silvia, 2002. "Integration effects in border regions : a survey of economic theory and empirical studies," HWWA Discussion Papers 179, Hamburg Institute of International Economics (HWWA).
    2. Annekatrin Niebuhr, 2003. "Market Potential and Regional Disparities in Europe," ERSA conference papers ersa03p178, European Regional Science Association.
    3. S. Brakman & H Garretsen & M. Schramm, 2003. "The Strategic Bombing of German Cities during World War II and its Impact for Germany," Working Papers 03-08, Utrecht School of Economics.
    4. Michael Pfaffermayr & Peter Huber & Yvonne Wolfmayr, 2004. "Market Potential and Border Effects in Europe," WIFO Working Papers 235, WIFO.
    5. Kakarot-Handtke, Egmont, 2011. "Keynes’s missing axioms," MPRA Paper 31179, University Library of Munich, Germany.
    6. Annekatrin Niebuhr, 2008. "The impact of EU enlargement on European border regions," International Journal of Public Policy, Inderscience Enterprises Ltd, pages 163-186.
    7. Walker, Sarah, 2012. "The (Rail)road to Structural Change: Transportation Costs, Integration, and Production Specialization," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124614, Agricultural and Applied Economics Association.
    8. Lammers, Konrad, 2002. "Die Osterweiterung aus raumwirtschaftlicher Perspektive : Prognosen regionalökonomischer Erfahrungen aus der bisherigen Integration in Europa," HWWA Discussion Papers 195, Hamburg Institute of International Economics (HWWA).

    More about this item

    Keywords

    economic geography; empirical estimation; Germany;

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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