on the optimal design of place based policies a structural evaluation of eu regional transfers we quantify general equilibrium effects of place based policies in a multi region framework with population mobility trade and agglomeration economies using detailed data on eu transfers we infer the local effects of different transfer types on productivity income and transportation cost based on these estimates and the general equilibrium model we derive the spatial distribution of economic activity and the resulting aggregate welfare effects if i no transfers were paid and taxes set to zero ii transfers were distributed uniformly iii transfers were welfare optimally distributed characterizing the optimal distributions we reveal complementarities between transfer types and between transfers and local endowments

dynamic inefficiency endogenous growth and ponzi games we show that in competitive endogenous growth models without externalities balanced growth equilibria are dynamically efficient with learning by doing externalities dynamic inefficiency may exist but due to the mix of capital rather than its scale these results are obtained independent of whether or not lifetimes are finite or generations overlap in olg models with externalities we show that ponzi games may be feasible even though equilibria are characterized by undersaving

financial integration capital mobility and income convergence recent studies have found that capital moves uphill from poor to rich countries and brings little or no growth dividend when it does flow into poor economies we show that europe does not conform to this paradigm in the european experience of financial integration capital has flown from rich to poor countries and such inflows have been associated with significant acceleration of income convergence analysing broader samples of countries we find that downhill capital flows tend to be observed above certain thresholds in institutional quality and financial integration but europe remains different even when allowing for such threshold effects and its experience is similar to that of interstate flows within the united states our findings are consistent with the notion that financial diversification reduces countries incentives to save in order to self insure against specific shocks abdul abiad daniel leigh and ashoka mody

do institutions matter for regional development rodriguez pose a do institutions matter for regional development regional studies this paper discusses whether institutions matter for regional development and how to integrate them in regional development strategies it is found that while institutions are crucial for economic development generating an institution based regional development strategy is likely to be undermined by the lack of definition of what are efficient institutions problems related to the measurement of institutions to their space and time variability to the difficulties in establishing the right mix of formal and informal institutions and to the endogeneity between institutions and economic development make one size fits all approaches to operationalizing institutions difficult the paper posits that in order to overcome these problems it is crucial to distinguish between the institutional environment and institutional arrangements that is to target not the institutions which shape the unique character of any territ

estimating willingness to pay for improved water quality in the presence of item nonresponse bias this article deals with the problem of item nonresponse in contingent valuation surveys using a payment card method by applying a grouped data sample selection estimation technique that is capable of imputing the missing values conditional upon a respondent s decision to answer a willingness to pay question the advantage of the technique lies in its ability to utilize all of the information in the sample permitting a more efficient estimation in the presence of item nonresponse bias the major determinants of willingness to pay appear to be household income number of children education perception of existing water quality and identification with environmental issues copyright 2003 oxford university press

money growth dynamic efficiency and asset bubbles in a perpetual youth model we consider a perpetual youth model in which real balances are an argument of the utility function we show that dynamic efficiency is compatible with a positive inflation rate and that the higher inflation the larger is the size of the bubble required to remove the inefficiency

globalization and competitive strategies in european vulnerable regions affuso a capello r and fratesi u globalization and competitive strategies in european vulnerable regions regional studies this paper highlights the role played by structural economic features and industrial competitive strategies in the performance of a group of european regions defined as vulnerable because of their specialization in industries particularly exposed to international trade different growth patterns emerge among them the most successful regions are those with a strong presence of high value added functions of best performing vulnerable sectors but also with high structural funds expenditure on human resources moreover among the industrial strategies analysed it is found that the only winning strategy explaining higher productivity gains is industrial reconversion at the expense of employment growth affuso a capello r et fratesi u la mondialisation et les strategies competitives des regions europeennes vulnerables regional studies cet article cherche a souligner le rol

going nuts the effect of eu structural funds on regional performance the european union eu provides grants to disadvantaged regions of member states to allow them to catch up with the eu average under the objective 1 scheme nuts2 regions with a per capita gdp level below 75 of the eu average qualify for structural funds transfers from the central eu budget this rule gives rise to a regression discontinuity design that exploits the discrete jump in the probability of eu transfer receipt at the 75 threshold for identification of causal effects of objective 1 treatment on outcome such as economic growth of eu regions we find positive per capita gdp growth effects of objective 1 transfers but no employment growth effects

a tale of an unwanted outcome transfers and local endowments of trust and cooperation abstract transfers can do good however they can also result in massive failures this paper presents a model that highlights the ambiguous nature of the impact of transfers on local endowments of social capital it then describes an empirical investigation that illustrates that the receipt of eu structural funds causes a deterioration of the endowments of trust and cooperation in the subsidized regions

complementing emu rethinking cohesion policy under emu the less competitive regions of the eu usually assumed to be peripheral have been widely expected to lose ground yet it is the core of the eu that so far has appeared to have suffered from the advent of the euro this paper looks at the processes behind regional divergence in the eu and presents evidence on recent and prospective trends as emu is consolidated bearing in mind that the imminent enlargement of the eu will radically change the political economy of the eu s efforts to assure cohesion policy issues are then discussed looking forward to the next renegotiation of the structural funds it is argued that difficult decisions have to be taken about the extent and character of eu policy the option of an open method of coordination for cohesion policy is put forward as a means of resolving some of the hard choices

the public sector and convergence with spatial interdependence empirical evidence from spain abstractwe propose a framework to analyse convergence between regions incorporating the public sector and technological knowledge spillovers in the context of a neoclassical growth model second we apply novel estimation methods pertaining to the spatial econometrics literature introducing a spatial durbin panel data model based on instrumental variables and maximum likelihood estimation our model makes it possible to analyse in terms of convergence the results obtained in spanish regions with the policies implemented during the period 1980 2011 the results support the idea that education and fiscal policies have a positive effect on regional development and cohesion therefore we can conclude that it is possible to obtain better results for regional convergence with higher rates of public investment in education and tax revenues we also obtain interesting results that confirm the existence of spillover effects in economic growth and public policies identifying their magnitude and significance

undermining the principle of concentration european union regional policy and the socio economic disadvantage of european regions crescenzi r undermining the principle of concentration european union regional policy and the socio economic disadvantage of european regions regional studies this paper sets out to analyse the regional policy of the european union by assessing whether the actual distribution of funds to the regions undermines the principle of territorial concentration the empirical analysis shows that due to either political equilibriums or inaccurate assumptions about the most cost effective allocation of the funds the sources of structural disadvantage are more spatially concentrated than the funds devoted to compensating this disadvantage and reveals a weak association between socio economic disadvantage and european union funding corrections in allocation mechanisms are recommended in order to increase fund concentration and earmark resources more adequately to disadvantaged regions crescenzi r saper le principe de la concentration la politique regionale de l union europeenne et le desavantage socio econom

evaluating the impact of the structural funds on objective 1 regions an exploratory discussion martin r and tyler p 2006 evaluating the impact of the structural funds on objective 1 regions an exploratory discussion regional studies 40 201 210 evaluation evidence on the impact of the structural funds on employment in objective 1 regions remains elusive this paper seeks to make a contribution to this task by evaluating the impact of european union regional policy on cumulative job creation in the least prosperous objective 1 regions at the nuts 2 level it adopts an evaluation methodology pioneered originally by moore and rhodes in 1973 in the uk while tentative it estimates that the cumulative effect of european union cohesion policy is around 1 million jobs as at 2002 which is a significant contribution despite the considerable methodological and measurement problems this paper aims to encourage further research to be undertaken in this important area objective 1 regions impact employment counterfactual determination martin r et tyler p 2006 evaluer l impact des fonds structu

regional tax coordination and foreign direct investment this paper analyses the effects of a regionally coordinated profit tax or location subsidy in a model with three active countries one of which is not part of the union and a globally mobile firm we show that regional coordination can lead to two types of welfare gain first for investments that would take place in the union in the absence of coordination a coordinated tax increase can transfer location rents from the firm to the union second by internalising all of the union s benefits from foreign direct investment a coordinated tax reduction can attract more welfare enhancing investment than when member states act in isolation depending on which motive dominates tax levels may thus rise or fall under regional coordination

asset bubbles in an overlapping generations model with endogenous labor supply this paper examines the effects of asset bubbles in an overlapping generations model with endogenous labor supply we show analytically that asset bubbles can lead to an expansion in steady state capital investment employment and output under certain conditions

economic growth with bubbles this paper presents a stylized model of economic growth with bubbles this model views asset price bubbles as a market generated device to moderate the effects of frictions in financial markets improving the allocation of investments and raising the capital stock and welfare the model illustrates various channels through which asset price bubbles affect the incentives for innovation and economic reforms and therefore the rate of economic growth the model also offers a new perspective on the effects of financial development on asset price bubbles and economic growth

public capital and total factor productivity new evidence from the italian regions 1970 98 destefanis s and sena v 2005 public capital and total factor productivity new evidence from the italian regions 1970 98 regional studies 39 603 618 this paper analyses the relationship between industrial total factor productivity and public capital across the 20 italian administrative regions it adds upon the existing literature in a number of ways it analyses a longer period 1970 98 it allows for the role of human capital accumulation it tests for the existence of a long run relationship between total factor productivity and public capital through previously suggested panel techniques and for weak exogeneity of public capital and it assesses the significance of public capital within a non parametric set up based on the free disposal hull the results confirm that public capital has a significant impact on the evolution of total factor productivity particularly in the southern regions this impact is mainly ascribed to the core infrastructures road and airports harbours railroads w

inequality and convergence in europe s regions reconsidering european regional policies europe s regions income disparities and regional policies in this paper we take a critical look at current european regional policies first we document the motivation for such policies that is the large income disparities across the regions of the eu15 large disparities are certainly present second we illustrate the various instruments adopted and discuss their underpinnings in established economic theories next we look at available data searching for three kinds of evidence 1 if disparities are either growing or decreasing we conclude they are neither 2 which are the major factors explaining such disparities and in particular if they are the factors predicted by the economic models adopted by the commission to justify current policies we conclude this is most certainly not the case 3 if there are clear signs that eu policies as opposed to other social and economic factors are actually reducing such disparities we cannot find any clear sign of such desired impact our conclusion is that regional and structural policies serve mostly a redistributional purpose motivated by the nature of the political equilibria upon which the european union is built they have little relationship with fostering economic growth this casts a serious doubt on their social value and furthermore strongly questions extending such policies to future members of the european union a successful eu enlargement in our view calls for an immediate and drastic revision of regional economic policies michele boldrin and fabio canova

monopolistic competition dynamic inefficiency and asset bubbles abstract we emphasise the importance of the market structure to determine whether dynamic inefficiency is possible in a closed economy we analyse alternative monopolistic competition frameworks where the existence of pure profit involves the presence of an asset market when entry is blockaded dynamic inefficiency is prevented as each firm uses a discount rate higher than the output growth rate in evaluating future profits when entry is free but involves sunk costs we need to distinguish between the possibility of asset bubbles and dynamic inefficiency the condition for the latter being more stringent if entry costs increase with per capita output dynamically inefficient equilibria are possible only when population grows

imputing a continuous income variable from a bracketed income variable with special attention to missing observations abstract this paper proposes a method based on polychotomous discrete choice methods to impute a continuous measure of income when only a bracketed measure of income is available and for only a subset of the obsevations the method is shown to perform well with cp5 data

imputing a continuous income variable from grouped and missing income observations abstract most cross sectional data sets collect income in a discrete number of categories that is in grouped form to simplify the respondent s task and to encourage a response in spite of such grouped data collection many respondents refuse to provide information on income this paper develops a method to impute a continuous and reliable value for income from grouped and missing income data

convergence in the trends and cycles of euro zone income multivariate unobserved components structural time series models are fitted to annual post war observations on real income per capita in countries in the euro zone the aim is to establish stylized facts about convergence as it relates both to long run and short run movements a new model in which convergence components are combined with a common trend and similar cycles is proposed the convergence components are formulated as a second order error correction mechanism this ensures that the extracted components change smoothly thereby enabling them to be separated from transitory cycles copyright 2005 john wiley sons ltd

regional mobility in the european union regional mobility in the spatial distribution of per capita income in the european union is examined over the period 1977 to 1999 the methodology used to investigate this issue combines a series of measures taken from the literature devoted to the dynamic study of personal income distribution with a non parametric analysis the results show limited mobility in the distribution considered and a decline in mobility over time the empirical evidence presented indicates moreover that mobility patterns vary as a function of regional development levels additionally the analysis carried out investigates the role played in explaining intra distribution mobility by variables such as per capita income population density per capita expenditure in investment market potential and the share in total employment of agriculture advanced services and non market services

between development and social policies the impact of european structural funds in objective 1 regions rodriguez pose a and fratesi u 2004 between development and social policies the impact of european structural funds in objective 1 regions reg studies 38 97 113 european regional support has grown in parallel with european integration the funds targeted at achieving greater economic and social cohesion and reducing disparities within the european union eu have more than doubled in relative terms since the end of the 1980s making development policies the second most important policy area in the eu the majority of the development funds have been earmarked for objective 1 regions i e regions where gdp per capita is below the 75 threshold of the eu average however the european development policies have come under increasing criticism based on two facts the lack of upward mobility of assisted regions and the absence of regional convergence this paper assesses using cross sectional and panel data analyses the failure so far of european development policies to fulfil their objective of de

should i stay or should i go an agent based setup for a trading and monetary union abstract the recent history of the european union eu suggests the importance of studying the conditions under which two or more countries can benefit from becoming part of a union of course this depends both on the economic characteristics of the involved countries and on the scope of the union i e the level of integration of markets regulations and institutional bodies this study tackles the topic from the angle of agent based computational economics by designing an open economy model inspired from the eu where countries can be part of a trade and monetary union we find that for similar countries it is always beneficial to be a member of a union although a lack of mobility frictions can cause a divergence between the two countries weakening the overall union performance even if countries have different productivity the performance of the union is in general better than the performance of the isolated countries the exception is when productivity gap and labor mobility are both high in this case a strong migration within the union can create economic distortions exacerbating the gap between the member states stronger fiscal integration helps reducing inequality between countries increasing the sustainability of the monetary union

an empirical model of transfers within a federation with an application to the european union abstract we construct a stylized model of transfers within a federation and apply it to the european union our approach differs from that of most of the existing literature in that we fix the preferences for redistribution of resources among a federation s members rather than fix the current budgetary rules or modify them on the basis of assumed scenarios the model is tested successfully by assessing its ability to predict the effects of the last 1995 enlargement on the european budget we then use the estimated model to predict the reallocation of the union s net transfers after the upcoming eastern enlargement our estimates of transfers to the incoming member states exceed those of the rest of the literature our results can be interpreted in one of two ways first either the european union in its collective decision making process that in the future will include the five incoming countries as voting members will institute new rules and programs to further reduce the regional disparities in income or second if the current rules and programs are maintained then the eastern enlargement would result in a reduction in the depth of the union the approach we introduce can be more generally applied to the analysis of other intergovernmental or international organizations

quality of life and economic convergence across spanish regions 1980 2001 marchante a j and ortega b 2006 quality of life and economic convergence across spanish regions 1980 2001 regional studies 40 471 483 evaluations of regional welfare conventionally rely on gross value added gva per capita as an indicator of living standards this paper attempts to readdress the regional welfare issue by using alternative composite indicators in the context of the united nations development programme undp human development indices evidence is presented regarding to what extent such alternative measures of living standards are converging with this aim a database for the spanish regions nuts ii was constructed for 1980 2001 and an augmented version of the human development index ahdi was estimated incorporating sub indices of health education and the resources required for a decent standard of living including an indicator of social exclusion the regional convergence of three per capita income measures and the raw data of seven indicators of quality of life were also

centralized fiscal spending by supranational unions we study fiscal spending by supranational unions where participation is voluntary and countries bargain over contributions to and the allocation of a central budget since decisions are made by unanimity bargaining power over the allocation becomes a function of contributions which generically causes inefficiency in the presence of income asymmetry between member nations this link between the budget allocation and contributions explains patterns of inefficient spending in the eu e g why resources are diverted to low productivity projects in high income countries the option of veto creates a trade off between efficiency on the contributions margin and efficiency on the allocation margin

asset bubbles and endogenous growth abstract we study the interaction between productive and nonproductive savings in economies with endogenous long run growth as in the neoclassical growth setting with overlapping generations asset bubbles can exist in an economy with endogenous growth provided that they are not too large and that the growth rate in the equilibrium without bubbles exceeds the interest rate here the existence conditions for bubbles reflect parameters of tastes and technology we find that bubbles when they exist retard the growth of the economy perhaps even in the long run and reduce the welfare of all generations born after the bubble appears

the dilemma of enlargement for the european union s regional policy or more than three decades the european union and formerly the european community and the european economic community has pursued a regional policy but the biggest challenge in the short history of this policy field is now under way this is the enlargement process of the european union which will include the former communist countries in eastern and central europe into the eu s existing policy framework we show below that integration of these countries into the eu creates a dilemma for the eu s regional policy the eu currently has two distinct regional policies one active and the other reactive in analysing the differences between them it becomes obvious that a shift from active to reactive regional policy is needed for the eastern enlargement otherwise the existing member states will jeopardise the enlargement process by refusing to finance the enormous increase in expenditures that would be required to continue an active regional policy but a shift to the reactive policy changes dramatically the incentives to the accession countries for eu membership and makes them more resistant to accepting fully the existing set of eu policies hence the dilemma continuing an active regional policy makes enlargement unattractive to the existing members switching to the reactive policy makes the eu membership less attractive to the accession countries to understand this dilemma of enlargement one must understand the forces that have driven the development of the eu s regional policy until today since

income and employment disparities across european regions the role of national and spatial factors meliciani v 2006 income and employment disparities across european regions the role of national and spatial factors regional studies 40 75 91 the paper analyses the impact of trends in employment rates on income convergence across european regions looking at the evolution of entire distributions between 1988 and 1996 european regions have been characterized by a very slow process of income convergence across countries and by a lack of income convergence within countries while trends in labour productivity have contributed to income convergence trends in employment rates have had a diverging impact polarization in employment rates also appears to be the result of national factors and of the negative performance of objective 1 regions more than the consequence of the emergence of geographical clusters that go beyond national borders regional convergence unemployment spatial correlation non parametric estimation meliciani v 2006 les ecarts de revenu et d emploi a travers les regions d euro

eu regional policy and tax competition the european union eu provides coordination and financing of trans european transport infrastructures i e roads and railways which link the eu member states and reduce the cost of transport and mobility this raises the question of whether eu involvement in this area is justified by inefficiencies of national infrastructure policies moreover an often expressed concern is that policies enhancing mobility may boost tax competition we analyze these questions using a model where countries compete for the location of profitable firms we show that a coordination of investment in transport cost reducing infrastructures within union countries enhances welfare and mitigates tax competition in contrast with regard to union periphery infrastructure the union has an interest in a coordinated reduction of investment expenditures here the effects on tax competition are ambiguous our results provide a rationale for eu level regional policy that supports the development of intra union infrastructure

the impact of structural and cohesion funds on eurozone convergence 1990 2010 maynou l saez m kyriacou a and bacaria j the impact of structural and cohesion funds on eurozone convergence 1990 2010 regional studies ever since the launch of the european integration process and in particular in the context of economic and monetary union the european union has endeavoured to facilitate economic convergence across europe by providing funds to its poorer regions and countries the main objective of this paper is to analyse whether the structural and cohesion funds have contributed towards convergence between the eurozone countries during the past two decades 1990 2010 the results of the spatio temporal econometric model specified in this paper illustrate that these funds have positively contributed to the gross domestic product per inhabitant gdppc growth of receiving regions thus allowing them to reach conditional convergence

growth enhancing bubbles this article challenges the conventional wisdom that speculation in financial markets reduces long run growth it shows that the real impact of a rational deterministic speculative bubble depends on the type of asset that is being speculated on speculative bubbles on equity raise the market value of firms thus encouraging entrepreneurship firm creation investment and growth on the other hand speculation on other types of assets is shown to be unambiguously growth impairing the model can explain some stylized facts about financial development and growth finally regulatory implications are discussed briefly