marshall s scale economies using panel data this paper estimates plant level production functions for machinery and high tech industries that allow for scale externalities from other plants in the same industry locally and from the scale or diversity of local economic activity outside the own industry the paper finds that the count of other own industry plants representing a count of local information spillover sources has strong productivity effects in high tech but not machinery industries single plant firms both benefit more from and generate greater external benefits than corporate plants given their greater reliance on external environments on dynamic externalities high tech single plant firms benefit also from the scale of past own industry activity i find little evidence of economies from the diversity or scale of local economic activity outside the own industry

variable returns to agglomeration and the effect of road traffic congestion abstract this paper investigates the links between returns to urban density productivity and road traffic congestion a generalised translog production inverse input demand function is estimated to test for the existence of variable returns to agglomeration in manufacturing construction and service industries two separate measures of urban density in which proximity is represented by straight line distance or by generalised cost are constructed and included in the translog to identify the effect of road traffic congestion the results show that for some sectors of the economy diminishing returns to urban density can set in causing the magnitude of agglomeration elasticity to fall as effective densities increase the generalised cost based measure of agglomeration produces higher elasticities because it captures both time and distance dimensions of density a comparison of spatial variance in estimates indicates that road traffic congestion plays an important role in explaining diminishing returns for the most highly urbanised locations

structural gaiatsu international finance and political change in japan argues that the principal contributor to changes in japan s political economy is the decline of japanese governmental control over capital flows and foreign exchange rates brought about by structural gaiatsu or direct foreign pressure differs from previous analysis of gaiatsu by arguing that international capital and market forces generate gaiatsu not foreign governments and that its influence has been worldwide as well as deeper and more ongoing than bilateral negotiating sessions and joint communiques related to trade discusses how the change has catalyzed a major increase in foreign direct investment by japanese owned corporations a reduction in government s ability to control corporate behavior a diminution of intra corporate linkages conflict within national economic policies and the increased penetration of the japanese economy by foreign financial institutions describes how the change has resulted in an emerging socio economic gap in japan between individuals groups and organizations demonstrates how the japanese experience suggests the transformative power of global capital markets on national political economies particularly those that have been interventionist in nature

the mass political economy of capital controls this article examines mass public opinion toward international financial market regulations known as capital controls conventional wisdom maintains that most voters do not pay attention to or c

networking off madison avenue known for the key role that networking plays in the operation of agencies where interviews suggest that informal networking among close neighbors is critical to many agencies success networking involves the exchange of ideas and while there is no market place for these ideas exchanges may be more deliberate rather than just marshall s 1890 mysteries of the air type of information spillovers this paper examines the effect on productivity of having more near advertising agency neighborhoods and hence better opportunities for meetings and exchange within manhattan we will show that there is extremely rapid spatial decay in the benefits of having more near neighbors even in the close quarters of southern manhattan a finding that is new to the empirical literature and indicates our understanding of scale externalities is still very limited the finding indicates that having a high density of commercial establishments is important in enhancing local productivity an issue in lucas and rossi hansberg 2002 where within business district spatial decay of spillovers plays a key role we will argue also that in manhattan advertising agencies trade off the higher rent costs of being in bigger clusters nearer centers of action against the lower rent costs of operating on the fringes away from high concentrations of other agencies introducing the idea of trade offs immediately suggests heterogeneity is involved we will show that higher quality agencies are the ones willing to pay more rent to locate in greater size clusters specifically because they benefit more from networking while all 1 the research in this paper was conducted while the authors were census bureau research associates at the boston research data center research results and conclusions expressed are those of the authors and do not necessarily indicate concurrence by the census bureau the paper has been screened to ensure that no confidential data are revealed we acknowledge helpful comments from andrew foster on aspects of the paper and from participants in seminars at brown university lse and the university of toronto

how local are spatial density externalities neighbourhood effects in agglomeration economies andersson m klaesson j and larsson j p how local are spatial density externalities neighbourhood effects in agglomeration economies regional studies the geographic scale at which density externalities operate is analysed in this paper using geocoded high resolution data the analysis is focused on exogenously determined within city squares neighbourhoods of 1 km2 the analysis confirms a city wide employment density wage elasticity and an economically significant density wage elasticity at the neighbourhood level that attenuate sharply with distance panel estimates over 20 years suggest a neighbourhood density wage elasticity of about 3 while the city wide elasticity is about 1 it is argued that the neighbourhood level is more prone to capture learning e g through knowledge and information spillovers this interpretation is supported by 1 significantly larger neighbourhood elasticities for university educated workers and 2 sharper attenuation with distance of the effect for such wo

regional heterogeneity and interregional research spillovers in european innovation modelling and policy implications guastella g and van oort f g regional heterogeneity and interregional research spillovers in european innovation modelling and policy implications regional studies in agglomeration studies the effects of various regional externalities related to knowledge spillovers remain largely unclear to explain innovation clustering scholars emphasize the contribution of localized knowledge spillovers lks and specifically when estimating the knowledge production function kpf of interregional research spillovers however less attention is paid to other causes of spatial heterogeneity in applied works spatial association in data is econometrically related to evidence of research spillovers this paper argues that in a kpf setting omitting spatial heterogeneity might lead to biased estimates of the effect of research spillovers as an empirical test a spatial kpf is estimated using eu 25 regional data including a spatial trend to control for unexplained spatial variation in innovation accounting

skills in the city this paper documents the allocation of skills across cities and estimates the impact of agglomeration on the hedonic prices of worker skills we find that large cities are more skilled than are small cities but only to a modest degree we also show that the increase in productivity associated with agglomeration as measured by the urban wage premium is larger for workers with stronger cognitive and people skills in contrast motor skills and physical strength are not rewarded to a greater degree in large cities urbanization thus enhances thinking and social interaction rather than physical abilities these results are robust to a variety of estimation strategies including using nlsy variables that control for worker quality and a worker msa fixed effect specification

technology agglomeration and regional competition for investment competition for firms by region has a long standing history and the academic literature has debated whether such competition is efficient we develop a model that explores technology development by firms facing regional competition for their invest ment and examine the endogenous determination of region policy firm technology and agglomeration externalities we find a new source of inefficiency regional competition leads firms to inefficiently distort their development and selection of production tech nology to improve their standing in the regional competition for their investment we show that these inefficient firm decisions on technology and location can also weaken agglomeration externalities jel classification h71 l2

third world indebted industrialization international finance and state capitalism in mexico brazil algeria and south korea the past fifteen years have seen two important developments in the international economic system the rapid industrialization of many less developed countries ldcs and their increasing indebtedness to private financial institutions massive bank loans have been used to fund industrial growth in many ldcs international financial markets have replaced multinational corporations as the third world s most important source of private foreign capital in four major borrowing countries mexico brazil algeria and south korea the process of indebted industrialization has its roots in the internationalization of finance the increasing role of the state and the use of funds raised on the international capital markets to finance industrial development the results include rapid expansions of ldc industrial production and ldc exports of manufactured products as well as the formation of an implicit partnership between private financial institutions and state capitalist elites in the third world

geography industrial organization and agglomeration this paper makes two contributions to the empirical literature on agglomeration economies first the paper uses a unique and rich database in conjunction with mapping software to measure the geographic extent of agglomerative externalities previous papers have been forced to assume that agglomeration economies are club goods that operate at a metropolitan scale second the paper tests for the existence of organizational agglomeration economies of the kind studied qualitatively by saxenian 1994 this is a potentially important source of increasing returns that previous empirical work has not considered results indicate that localization economies attenuate rapidly and that industrial organization affects the benefits of agglomeration

spatial evolution of the computer industry in the usa abstract this paper examines the spatial evolution of computers across 317 metro areas in the usa since the introduction of the personal computer we start by examining the relative distribution of employment across cities examining how that distribution changes in 1977 1992 and how cities move through the distribution for computers transition matrices are stationary with the industry exhibiting no tendency to settle down nor any tendency of retrenchment during periods of national high tech employment decline there is no tendency of the relative size distribution of computer employment to collapse go bimodal etc overall computers exhibit some turbulence with dramatic big winners and losers among cities as well as persistence for some cities in employment shares in attracting or repelling an industry urban heterogeneity is important large well educated cities near san jose have a much greater chance of attracting high tech employment much lower mean first passage times moving up states and less chance of losing it in assessing the determinants of persistence in local employment patterns we examine sources of productivity growth we find strong evidence of significant dynamic own industry externalities for single plant firms and little evidence of urbanization jacobs knowledge type externalities corporate plants in computers seem to be self reliant and not really influenced by externalities

technology parks and regional economic growth in china abstract china s technology parks have been growing rapidly in the decade that followed their establishment i examine whether this is merely in response to the policy incentives or there have been external economies from the concentration of high technology firms in the technology parks as policy makers had hoped using data on china s 53 national technology parks from 1992 to 2000 and data on the metropolises that host them i find results that are consistent with the neoclassical growth mechanism labor productivity across technology parks is converging and there is no evidence of geographical external economies but the foreign direct investment the host city receives has robustly contributed to the productivity growth in the technology parks finally i find evidence that in their early stage of development the technology parks have hampered the secular trend of increasing regional inequality in china

power and the control of capital this essay reviews three recent books on the political economy of finance in postcolonial asia and latin america and suggests a framework for examining the relationship between political power and varying patterns of control over investment resources the stress is on the constraints different controllers of capital can impose on state leaders the conditions under which policymakers can subvert these constraints and how conflicts within the state over the trajectory of policy are mediated by who or what supplies critical investment resources and the institutional channels through which the resources flow

agglomeration and actual tax rates firm level evidence from china abstractagglomeration and actual tax rates firm level evidence from china regional studies across china the lower quartile of firms pays almost no tax whereas the upper quartile pays the full tax rate of 33 this paper suggests that a driver of this phenomenon is heterogeneous agglomeration using the full sample of medium and large manufacturing firms in china from 2000 to 2007 the empirical estimation results confirm that more agglomerated regions generally collect tax at higher rates furthermore the results show that the tax agglomeration effect varies with firm mobility the positive relationship between tax rates and agglomeration holds more for non state owned firms which are more mobile than for state owned firms

how do crises lead to change liberalizing capital controls in the early years of new order indonesia how do crises lead to change rationalist approaches to the question that emphasize inexorable structural responses and the pursuit of distributive preferences by newly dominant coalitions are inadequate because they obscure the social mediation of material events and the pervasive uncertainty that follows destabilization of the precrisis status quo the latter constrains actors from fully grasping their distributive preferences until uncertainty is reduced persuasion emerges as a key mechanism of change although constructivist approaches emphasize persuasive practices they have yet to adequately specify the scope conditions underpinning the selection of new ideas this article goes beyond much of the constructivist focus on domestic legitimacy and static notions of resonance by emphasizing external credibility and dynamic processes of resonance building by norm entrepreneurs the author specifies four features what he calls the four cs of crisis resolution that shape the process of idea selection carriers composition crossover appeal and credibility developing these arguments in the case of the early years of new order indonesia the article suggests that whenever a prominent and cohesive group of advocates promotes an idea that has sufficient ideational and distributive appeal and the endorsement of external actors whose seal of approval is perceived as important intersubjective belief change and thus institutional and policy change is more likely

wage premia in employment clusters how important is worker heterogeneity this article tests whether the correlation between wages and concentration of employment can be explained by unobserved worker productivity residential location is used as a proxy for unobserved productivity and average commute time to workplace is used to test whether location based productivity differences are compensated away by longer commutes analyses using confidential data from the 2000 decennial census find that estimates of agglomeration wage premia within metropolitan areas are robust to comparisons within residential location and that estimates do not persist after controlling for commuting costs suggesting that the productivity differences across locations are due to location not individual unobservables

indonesia from showcase to basket case in the year after the onset of the east asian financial crisis a diverse set of national crises began to take shape among these indonesia s is by far the most severe national income was expected to contract in 1998 by between 10 and 15 and the decline to extend into 1999 1 according to government estimates the proportion of the population below the poverty line has risen to 40 and 15 million workers have lost their jobs thoenes 1998b 2 a severe drought has complicated matters driving up food prices and causing shortages in some locations 3 the banking system is essentially defunct suppressing exports and reducing whole industries to resort to barter as the last remaining source of working capital 4 the nation s currency the rupiah was still trading in july 1998 at around 15 000 to the us dollar levels at which it ceases tofunction as a meaningful store of economic value

the dynamics of agglomeration externalities along the life cycle of industries neffke f henning m boschma r lundquist k j and olander l o the dynamics of agglomeration externalities along the life cycle of industries regional studies this paper investigates the changing roles of agglomeration externalities along the industry life cycle it is argued that industries have different agglomeration needs in different stages of their life cycles because their mode of competition innovation intensity and learning opportunities change over time for twelve swedish manufacturing industries it is determined for each year between 1974 and 2004 whether the industry is in a young intermediate or mature stage whereas marshall arrow romer mar externalities steadily increase with the maturity of industries the effects of local diversity jacobs externalities are positive for young industries but decline and even become negative for more mature industries neffke f henning m boschma r lundquist k j et olander l o la dynamique des effets externes d agglomeration tout

estimating dynamic localization economies the inadvertent success of the specialization index and the location quotient estimating dynamic localization economies the inadvertent success of the specialization index and the location quotient regional studies after addressing definitional issues on the concepts of c

increasing returns to scale in financial intermediation and the non neutrality of government policy a general equilibrium model of imperfectly competitive financial intermediaries is constructed and used to study the effects of some standard policy experiments one time increases in the growth rate and in the level of the stock of money have non neutral and sometimes surprising effects on interest rates the quantity of intermediated borrowing and lending the number of intermediary firms inflation and the price level optimal government macroeconomic policy is shown to reflect a tradeoff between public sector frictions and the capital market distortion created by increasing returns to scale and imperfect competition in private intermediation

agglomeration and clusters tools and insights from coagglomeration patterns geographic clusters have received first order policy attention despite our limited academic knowledge about them i explain how coagglomeration patterns of industries can inform the analysis of clusters by allowing us to better delineate them to explore the causal mechanisms underlying them and to more finely assess their impact on various economic outcomes

industry specific firm growth and agglomeration duschl m scholl t brenner t luxen d and raschke f industry specific firm growth and agglomeration regional studies this paper analyses the industry specific relationship between industrial clustering and firm growth micro geographically defined agglomeration measures based on travel time distances and a flexible log logistic decay function framework are used to study the spatial impacts of related economic and knowledge generating activities in 23 industries it is found that firms growth prospects tend to be generally hampered by the agglomeration of own industry employment whereas the impact of proximate scientific activities systematically depends on the kind and age of industry furthermore the optimal specifications of decay function that measures agglomeration effects considerably vary between both the industrsssies and the variables

revisiting the single european act and the common wisdom on globalization the european program of liberalization launched by the single european act sea of 1987 is commonly seen as a powerful instance of globalization trends of economic integration liberalization and international institution building this article revisits the origins of the sea to argue that the extent and success of its liberalizing program depended on a causally distinct push for european institutional reform a retracing of concrete political patterns behind the sea greatly strengthens broader statistical and theoretical challenges to the notion of strong universal trends of globalization

a theory of urban growth in an economy experiencing endogenous economic growth and exogenous population growth we explore two main themes how urbanization affects efficiency of the growth process and how growth affects patterns of urbanization localized information spillovers promote agglomeration and human capital accumulation fosters endogenous growth individual city sizes grow with local human capital accumulation and knowledge spillovers and city numbers generally increase which we demonstrate is consistent with empirical evidence we analyze whether local governments can successfully internalize local dynamic externalities in addition we explore how growth involves real income differences across city types and how urbanization can foster income inequality most nonagricultural production in developed countries occurs in metropolitan areas the underlying reasons why economic activity agglomerates into cities localized information and knowledge spillover also make cities the engines of economic growth in an we gratefully acknowledge support of the national science foundation grants sbr 9422440 and sbr9730142 for this research the work has benefited from conversations with harl ryder on the dynamics of the model and from comments by gilles duranton and participants in seminars at brown colorado and texas austin and a presentation at an isit seminar sponsored by the centre for economic policy research and the national bureau of economic research

firm heterogeneity and location choices evidence from foreign manufacturing investments in china this paper develops a model which indicates that foreign firms location choices are determined jointly by site attributes and firm heterogeneity the model is estimated using data on 2565 foreign manufacturing investments in china the conditional logit estimates and simulation results provide supportive evidence an increase in a firm s labour intensity magnifies the impact of labour cost while a location s local communications infrastructure has a stronger influence on foreign firms that have adopted modern information technology it is also found that agglomeration effects decrease with firm size and labour quality implications for researchers and policy makers are discussed in the conclusion

macroeconomic implications of agglomeration cities exist because of the productivity gains that arise from clustering production and workers a process called agglomeration how important is agglomeration for aggregate growth this paper constructs a dynamic stochastic general equilibrium model of cities and uses it to estimate the effect of local agglomeration on aggregate growth we combine aggregate time series and city level panel data to estimate the model s parameters via generalized method of moments the estimates imply a statistically and economically significant impact of local agglomeration on the growth rate of per capita consumption raising it by about 10

valuing rail access using transport innovations this paper uses a powerful empirical method to evaluate the benefits of rail access to consumers we study the effects on house prices of a transport innovation that altered the distance to the nearest station for some households but left others unaffected the transport innovation we study is the construction of new stations in london in the late 1990s using this innovation we implement a quasi experimental approach that allows us to avoid the biases inherent in cross sectional valuation work our evidence on distance station effects on local prices identified through distance changes induced by the transport innovation suggests that households value rail access and that these valuations are large compared to the valuations of other local amenities

an evaluation of competitive industrial structure and regional manufacturing employment change drucker j an evaluation of competitive industrial structure and regional manufacturing employment change regional studies this paper examines the relationship between regional industrial structure and employment change in the manufacturing sector and nineteen subsectors in the united states from 1987 to 1997 the relative associations of economic diversity industrial specialization and competitive structure with economic performance are assessed using a non causal regression framework multiple facets of industrial structure at the regional scale including competitive structure are considered together by exploiting confidential microdata to construct and evaluate detailed metrics across broad geographic and industrial ranges the findings suggest the importance of industrial competitive structure for understanding regional employment change economic performance and industrial development

applying tradable permits to biodiversity conservation effects of space dependent conservation benefits and cost heterogeneity on habitat allocation this paper is concerned with the cost effective allocation of habitat for species under spatio temporally heterogeneous economic development to address the dynamic dimension of the problem we consider tradable development rights as the instrument of choice a particular challenge in applying tradable development rights is that the conservation benefit of an individual habitat patch depends on its spatial relationship with other habitat patches and thus is an emergent rather than a fixed property we analyse with a conceptual model the spatial and temporal dynamics of habitats in a region under a tradable development rights market that takes spatial interaction of habitats explicitly into account in our analysis two different outcomes may emerge depending on the levels of spatial interaction and cost heterogeneity an ordered structure where habitat patches are clustered in space and are stable over time and a disordered structure where habitat patches are scattered in space and subject to high turnover of destruction and recreation a high level of spatial interaction or a low level of cost heterogeneity favours an ordered structure while a low level of spatial interaction or a high level of cost heterogeneity favours a disordered structure

local economic development agglomeration economies and the big push 100 years of evidence from the tennessee valley authority we study the long run eects of one of the most ambitious place based economic development policies in u s history the tennessee valley authority using a rich panel dataset of counties we conduct an evaluation of the dynamic eects of the tva on local economies in the seventy years following the program s inception we nd that the tva led to short run gains in agricultural employment that were eventually reversed while impacts on manufacturing employment continued to intensify well after the program s subsidies had lapsed a pattern consistent with the presence of strong agglomeration economies in the manufacturing sector economists have long cautioned that the local gains created by place based policies may be oset by losses elsewhere yielding ambiguous eects on the u s as a whole building on the framework in glaeser and gottlieb 2008 we develop a novel approach to assessing the aggregate consequences of shifting the spatial distribution of manufacturing employment our ndings suggest the aggregate productivity gains associated with relocating manufacturing activity to the tva region were probably minimal

agglomeration economies and clustering evidence from german and european firms this article empirically analyses the impact of agglomeration economies on the clustering of german and european firms using partial proportional odds models firms are grouped according to industry and divided into departments at the industry level i find evidence for inter industry economies derived from the new economic geography neg framework for european firms in general and german knowledge intensive firms in particular at the department level marshallian externalities such as the hiring of skilled labour and technological spillover and therefore intra industry economies are empirically confirmed for european and german departments like human resources and r d but rarely for others

does history matter only when it matters little the case of city industry location when will an industry subject to agglomeration economies move from an old high cost site to a new low cost site it is argued that history in the form of sunk costs resulting from the operation of many firms at a site creates a first mover disadvantage that can prevent relocation it is demonstrated that developers of industrial parks can partly overcome this inertia through discriminatory pricing of land over time and empirical evidence is provided that they actually engage in such behavior it is also shown that other aspects of developer land sale strategy can be a source of information on the nature of interfirm externalities

learning by working in big cities individual earnings are higher in bigger cities we consider three reasons spatial sorting of initially more productive workers static advantages from workers current location and learning by working in bigger cities using rich administrative data for spain we find that workers in bigger cities do not have higher initial ability as reflected in fixed effects instead they obtain an immediate static premium and accumulate more valuable experience the additional value of experi ence in bigger cities persists after leaving and is stronger for those with higher initial ability this explains both the higher mean and greater dispersion of earnings in bigger cities

agglomeration opportunism and the organization of production abstract recent economic analysis of outsourcing has emphasized its international dimension in contrast this paper focuses on local outsourcing the paper specifies and solves a model where the organization of production vertically integrated or not and the location of production agglomerated or not are jointly determined the paper shows that agglomeration reduces opportunism a thick market effect and so serves as a substitute for integration this force will lead firms to agglomerate the paper also shows that the normative properties of equilibrium with local outsourcing are not as clear cut as for international outsourcing since local agglomeration is achieved at the cost of congestion local markets may be too thick which would not be the case for an increase in the thickness of a world market finally the many changes in economic and social circumstance that have been labeled globalization do not impact only vertically integrated firms they also impact cities and industry clusters to the extent that agglomeration is a substitute for vertical integration

de globalization theories predictions and opportunities for international business research de globalization now a distinct possibility would induce a significant qualitative shift in strategies structures and behaviors observable in international business ib coming to terms with this qualitative shift would require ib research to develop a much deeper integration of politics the key driver of de globalization to support such integration this paper introduces two relevant theories of de globalization from political science liberalism and realism both predict de globalization under current conditions but lead to different expectations about the future world economy liberalism suggests a patchwork of economic linkages while realism predicts the emergence of economic blocs around major countries this paper discusses the resulting opportunities in three areas of ib research political strategies and roles of multinational enterprises mnes global value chains and the role of the national context for political strategies and roles there is a need to explore how regular business activities and deliberate political agency of mnes affect the political sustainability of globalization for value chains questions include their future reach and specialization changes in organizational forms and the impact of political considerations on location decisions research opportunities on national contexts relate to their ability to sustain globalization and their connection with economic and military power

technological specialization and variety in urban invention o huallachain b and lee d s technological specialization and variety in urban invention regional studies urban economic theory distinguishes between knowledge spillovers that occur within specializations and those that cross technologies empirical analysis has sought to gauge their relative strength but the results are inconclusive metropolitan specialization and variety at different aggregation levels of a us patent classification system are assessed using theil s relative entropy index the results show that specialization and variety are not competing features of urban technological structure cities can have both the invention rate positively associates with specialization in diverse technologies the cross fertilization of ideas among skilled professionals with different expertise and the interaction between specialists of narrow fields of knowledge are both important in technological advance the most inventive cities have deep specializations in different technologies the results also sho

spatial wage disparities sorting matters spatial wage disparities can result from spatial differences in the skill composition of the workforce in non human endowments and in local interactions to distinguish between these explanations we estimate a model of wage determination across local labour markets using a very large panel of french workers we control for worker characteristics worker fixed effects industry fixed effects and the characteristics of the local labour market our findings suggest that individual skills account for a large fraction of existing spatial wage disparities with strong evidence of spatial sorting by skills interaction effects are mostly driven by the local density of employment not controlling for worker heterogeneity leads to very biased estimates of interaction effects endowments only appear to play a small role

the political economy of financial internationalization in the developing world in the last decade a growing number of developing countries have opened their financial systems by liberalizing capital flows and the rules governing the international operations of financial intermediaries one explanation of this rush toward greater financial internationalization is that increasing interdependence generates domestic and foreign political pressures for capital account liberalization while we find evidence for that hypothesis we find that the proximate cause in developing countries more frequently is found in balance of payments crises politicians perceive that financial openness in the face of crisis can increase capital inflows by indicating to foreign investors that they will be able to liquidate their investments and by signaling government intentions to maintain fiscal and monetary discipline the argument is explored through case studies of chile indonesia mexico and south korea

taxes and agglomeration economies how are they related to nonprofit firm location author affiliation teresa d harrison department of economics drexel university 3141 chestnut street philadelphia pa 19104 usa tharrison drexel edu1 introductionnonprofits are an ever increasing component of the u s economy from 1997 2001 employment growth in the nonprofit sector averaged 2 5 outpacing both the business 1 8 and the government sectors 1 6 moore 2004 much of this growth stems from new nonprofits yet few studies have investigated possible determinants of nonprofit entry and location decisions most of these studies focus on demand side factors wolch and geiger 1983 downes and greenstein 1996 bielefeld murdoch and waddell 1997 for example downes and greenstein 1996 focus on demographic and religious characteristics of the surrounding community and its relation to private school location in this paper i use firm level data and focus on potentially important supply side variables tax rates and agglomeration economies most nonprofits are exempt from corporate sales and property taxes hansmann 1987 and gulley and santerre 1993 find evidence that higher corporate property and sales taxes are positively related to nonprofit market share however market share measures obfuscate the dynamics of the industry in terms of entry and exit rates if market share for nonprofits increases in response to higher tax rates this could be because new nonprofits are entering or because for profits are leaving the industry identifying these two cases is impossible with market share data using nonprofit tax return data i examine the relation between these tax exemptions and state county location decisions of new nonprofits to my knowledge this is the first paper to study these interactions at the individual firm level nonprofits also receive tax favored status due to the individual tax deduction on charitable contributions gentry and penrod 1998 employees of and donors to the nonprofits will be affected by the individual tax rates this in turn alters the costs to the nonprofit of location in a high or low tax area unlike previous studies i therefore investigate the relation between individual marginal tax rates and nonprofit location another potential supply side determinant of firm location decisions is the existing firm concentration in the area the potential economies of scale generated by proximity to other firms have been extensively examined in for profit industries 1 previous studies have generally found a positive relation between agglomeration and location carlton 1983 bartik 1985 woodward 1992 gius and frese 2002 rosenthal and strange 2003 to my knowledge bielefeld et al 2004 is the only study that examines nonprofit agglomeration finding evidence of agglomeration in dallas texas this warrants additional examination because nonprofit output is generally service driven and less mobile thus agglomeration implies greater direct competition making market saturation a larger issue in the nonprofit market using a nationwide dataset i examine how location and existing firm concentration are related and explore the potential presence of market saturation i also investigate possible differences between inter and intra industry agglomeration my results provide new insight into nonprofit firm behavior in most cases higher tax rates are associated with new firm location but the results for corporate and property taxes vary across the sample years i find that individual tax rates are an important consideration for nonprofits and are positively correlated to location my analysis also contributes to the literature by examining how the sensitivity to tax rates varies according to the sources of revenues for the institution firms that depend highly on individual donations are more likely to locate in high individual tax states while nonprofits with large mission related revenues are more sensitive to the property tax rate

distance based agglomeration externalities and neighbouring firms characteristics abstractthis paper tests the hypothesis that firms with different characteristics can differ in their capability to produce local externalities by investigating the relationship between firm specific distance based weighted agglomeration measures and firms short run productivity growth in the italian manufacturing industry the results suggest that positive localization economies increase with distance when neighbouring firms characteristics are accounted for diversification type forces have negative effects on productivity growth at short distances while there are positive effects at longer distances regardless of the weighting scheme considered moreover the negative effect of inter industry externalities seems to persist over distance when neighbouring firms characteristics are accounted for

the economics of urban density density boosts productivity and innovation improves access to goods and services reduces typical travel distances encourages energy efficient construction and transport and allows broader sharing of scarce urban amenities however density is also synonymous with crowding and makes living and moving in cities more costly we explore the appropriate measurement of density and describe how it is both a cause and a consequence of the evolution of cities we then discuss whether and how policy should target density and why in practice the tradeoff between its pros and cons is unhappily resolved by both market and political forces

exchange rate theory and practice this volume grew out of a national bureau of economic research conference on exchange rates held in bellagio italy in 1982 in it the world s most respected international monetary economists discuss three significant new views on the economics of exchange rates rudiger dornbusch s overshooting model jacob frenkel s and michael mussa s asset market variants and pentti kouri s current account portfolio approach their papers test these views with evidence from empirical studies and analyze a number of exchange rate policies in use today including those of the european monetary system

the politics of common knowledge ideas and institutional change in wage bargaining domestic economic institutions change through processes of conflict and bargaining why do the strongest groups in such conflicts ever change their minds about the acceptability of institutional arrangements they once opposed drawing on the cases of ireland in 1986 87 and italy in 1989 93 this article demonstrates how the process of common knowledge creation between employers and unions changed the course of negotiations over national wage bargaining institutions common knowledge creation happens when existing institutions are in crisis the institutional experimentation that follows such crises characterized by deep uncertainty places a premium on persuasive argument the ideas most likely to serve as the basis for newly common knowledge will have analytical and distributive appeal to both unions and employers and they must be ratified in public agreements which i call common knowledge events common knowledge events establish new social facts which can change the payoffs associated with different institutional outcomes this can lead even powerful actors to accept institutions they had previously opposed the author thanks marius busemeyer mary louise culpepper keith darden orfeo fioretos archon fung peter hall andrew martin cathie jo martin victoria murillo kathleen thelen and gunnar trumbull along with three anonymous reviewers and the editors of io for comments and conversations that improved this article ben ansell and vikram siddarth provided valuable research assistance financial support from the john f kennedy school of government and the weatherhead center for international affairs at harvard university is gratefully acknowledged any remaining errors are my own

effects of environmental regulation on foreign and domestic plant births is there a home field advantage abstract whether environmental regulations alter capital flows remains a hotly debated issue this paper uses county level data to examine the location decisions of domestic and foreign firms in a single empirical model and tests for asymmetries by firm origin in the degree to which capital flows are influenced by environmental standards we find that while domestic firms are influenced by environmental regulations foreign firms are not since the benefits of foreign investment are well documented foreign plants typically provide more jobs and increase local wages by more than domestic plants this result suggests a double dividend is available foreign plants provide an economic stimulus and are not unduly influenced by environmental protections

the attenuation of human capital spillovers abstract this paper uses 2000 census data to estimate the relationship of agglomeration and proximity to human capital to wages the paper takes a geographic approach and focuses on the attenuation of agglomeration and human capital effects differencing and instrumental variable methods are employed to address endogeneity in the wage agglomeration relationship and also to deal with measurement error in our agglomeration and human capital variables three key results are obtained first the spatial concentration of employment within five miles is positively related to wage second the benefits of spatial concentration are driven by proximity to college educated workers an instance of human capital spillovers third these effects attenuate sharply with distance

no place like home relocation capabilities and firm survival in the german machine tool industry after world war ii we explore the extent to which organizational capabilities are location specific by studying the location choices and longevity of east german machine tool producers that relocated to west germany after world war ii relocating firms were similar in performance to experienced west german incumbents they outperformed new entrants without prewar industry experience this suggests they were able to build on capabilities acquired before the war even though relocating firms tended lo locate in industry agglomerations and in urbanized regions we find no evidence suggesting that firm performance benefited from agglomeration economies copyright 2011 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

profiting from agglomeration evidence from the salmon aquaculture industry asche f roll k h and tveteras r profiting from agglomeration evidence from the salmon aquaculture industry regional studies even though most celebrated clusters seem to be in high cost areas many econometric studies represent agglomeration externalities as increased primal productivity or reduced cost while this certainly can be consistent with some observed agglomeration effects it may be insufficient for the growth of a cluster the key condition for this is that profitability is higher the paper tests for agglomeration effects using a profit function approach this may be particularly important for firms in high cost clusters where revenue effects can be as important as productivity and cost effects the paper tests for both intra and inter industry agglomeration externalities using firm level data

sovereignty credible commitments and economic prosperity on american indian reservations abstract american indian reservations are islands of poverty in a sea of wealth because this poverty cannot be explained solely by natural resource physical and human capital constraints institutions are likely to be part of the explanation one of the institutional variables is the sovereign power of tribes which allows tribal governments to act opportunistically the potential for such opportunistic behavior can thwart economic development if tribes are unable to make credible commitments to stable contract enforcement one avenue for credible commitments is public law 280 which required some tribes to turn judicial jurisdiction over civil disputes to the states in which they reside using data for 1969 99 we find that per capita income for american indians on reservations subject to state jurisdiction grew significantly more than it did for indians who were not

marshall s scale economies and jacobs externality in korea the role of age size and the legal form of organisation of establishments this paper revisits the concept of agglomeration economies by estimating the effects of localisation urbanisation and local competition on labour productivity using establish ment level data in korean manufacturing industries it is found that when an establish ment locates in a more localised specialised more urbanised diversified and more competitive area its workers become more productive due to external benefits from agglomeration issues of self selection bias and omitted variable bias are addressed by instrumenting the variables measuring localisation economies and controlling for the fixed effects of establishments location and industries year however the external effects from the spatial proximity of other establishments vary across the categories of industry type age size and legal form of organisation of establishments establishments in traditional heavy manufacturing industries receive more external benefits in a less diversified area while those in transport equipment manufacturing industries enjoy the largest benefits from localisation externalities exist for establishments aged between 2 and 7 years having at least 10 workers being corporate and having multiplants or not being headquarters establishments in relatively young industries rely more on diver sified environments while establishments in relatively old industries receive greater external benefits in the same industry cluster this result supports the product life cycle location theory of duranton and puga

economies of density and productivity in service industries an analysis of personal service industries based on establishment level data abstract this study aims to empirically investigate the determinants of service industry productivity such as economies of scale and economies of density by using establishment level data related to personal service industries in japan the study estimates the production functions for both value added and physical output measures in almost all the service industries examined significant economies of scale and economies of density are observed wherein productivity increases by 7 to 15 when the municipality population density doubles these findings are confirmed by an estimation in which the measures of physical output are considered instead of value added

which agglomeration externalities matter most and why this paper revisits the ongoing discussion on the importance of agglomeration externalities specifically specialization diversity and competition effects that may contribute to innovation productivity and urban employment growth previous meta analyses suggested that the evidence on agglomeration externalities is strongly context specific expanding an earlier analysis of 31 articles we seek to draw in this paper more robust conclusions by means of the statistical evidence for agglomeration externalities presented in 73 scientific articles all building on the seminal work of glaeser et al 1992 our results confirm that the heterogeneity among studies is huge and can only be partially accounted for by means of an ordered probit analysis additionally some evidence of publication bias is found we conclude that the conventional lines of inquiry in this literature may now have reached strongly diminishing returns new lines of inquiry using rich micro level data on firms and workers dynamic general equilibrium models at the macro level more attention for spatial and temporal variation in the impacts of agglomeration and further investigations into the spatial scope of externalities are promising avenues for further research that can enhance our understanding of how agglomeration externalities continue to fuel our increasingly urbanized world

globalization and the skilled city abstract the location of economic activity both across and within countries has undergone dramatic shifts over the last five decades three key trends stand out first cross country inequality has declined as many developing countries have grown rapidly second economic geography within countries has instead grown more unequal in both the developed and the developing world third within country spatial disparities have grown mainly because of the disproportionate success of skilled cities in this paper i develop a model that jointly explains these patterns as a consequence of deepening international economic integration my model explains the faster population and output growth of skilled cities as well as their tendency to increase their initial skill advantage consistent with the evidence my theory predicts a non monotonic path of urban growth in developed countries the model predicts a future shift in worldwide urban hierarchies as some developing world cities overtake unskilled cities in industrialized countries along global supply chains

agglomeration economies in the finnish manufacturing sector regional concentration of population and economic activity is a common phenomenon both in finland and the other most developed countries which refers to the existence of agglomeration economies two types of economies are usually recognized to be important specialization marshall externalities and diversity jacobs externalities economies the former refer to the geographical concentration of a specific industry and the latter to the industrial diversity of the local system this study examines the relationship between agglomeration economies and regional productivity in the manufacturing sector in finland a distinction is made between the effects of urbanization and localization economies the production function method is applied to the manufacturing sub sectors in the 83 nuts 4 level regions in 1995 and 1999 the results support the regional specialization more than diversification even if some differences can be seen between the manufacturing sub sectors

institutions and casinos on american indian reservations an empirical analysis of the location of indian casinos abstractthis paper empirically investigates the institutional determinants of whether a tribal government invests in a casino i find that the presence of indian casinos is strongly related to plausibly exogenous variation in reservations legal and political institutions tribal governments that can negotiate gaming compacts with multiple state governments because tribal lands span state borders had more than twice the estimated probability 77 versus 32 of operating an indian casino in 1999 tribal governments of reservations where contracts are adjudicated in state courts rather than tribal courts have more than twice the estimated probability 76 versus 34 of investing in an indian casino ceteris paribus these findings suggest that states political pressures and predictable judiciaries affect incentives to invest in casinos this study contributes more generally to the empirical literature on the effects of institutions by providing new evidence that low cost contracting is important fo

agglomeration economies in urban manufacturing industries a case of japanese cities abstract the effects of urban agglomeration economies on productivities in two digit manufacturing industries is estimated using the cross section data of japanese cities in 1979 urbanization and localization economies which are major forms of urban agglomeration economies are explicitly separated the estimates of these economies vary considerably among industries light industries receive more productive advantages from urbanization economies than from localization economies but heavy industries experience these economies more from localization economies than from urbanization economies

external economies as a mechanism of agglomeration in eu manufacturing productive externalities are significant determinants of agglomeration not deeply studied at the industry and international level we analyse the impact on productivity growth of technological externalities both inter and intraindustry national or international at the industry level for the eu countries and the period 1995 2002 the results confirm the advisability of considering international externalities when countries are taken as regions whose omission underestimates national spillovers together with national endowments and a central geographical position the growth of productivity is encouraged by national and international specialization as a general result moreover it is fuelled by stronger interindustry spillovers and productive diversification a result more evident for high technology industries while lower technology industries are more sensitive to the omission of international externalities economic integration seems to be relevant because supranational regions with less frictio

international institutions and domestic compensation the imf and the politics of capital account liberalization certain governments have been faster than others in relaxing their restrictions on the cross border movement of capital how can we explain the timing and extent of financial liberalization across countries since the 1970s we argue that imf stabilizationprogramsprovideawindowofopportunityforgovernmentstoinitiatefinancialreforms butthatpolicymakers are more likely to seize this opportunity when welfare expenditures are high large loans from the imf shield policy makers from the costs of financial reform while welfare expenditures provide credibility to the government s ex ante promises of compensation to individuals who are harmed by the reforms we test this hypothesis on data for 87 countries from 1975 to 2002 we employ a spatial autoregressive error sample selection model which accounts for the nonrandom participation of countries in imf programs as well as the processes of international policy diffusion the results provide strong support for the interactive effect of imf programs and domestic welfare expenditures on financial liberalization

smart cafe cities testing human capital externalities in the boston metropolitan area abstract existing studies have explored only one or in some cases two mechanisms by which human capital externalities percolate at the macrogeographic levels this study however uses the 1990 massachusetts census data to test four mechanisms at the microgeographic levels in the boston metropolitan area labor market we propose that individual workers can learn from their occupational and industrial peers in the same local labor market through four channels depth of human capital stock marshallian labor market externalities jacobs labor market externalities and thickness of the local labor market we find that all types of human capital externalities are significant across census blocks different types of externalities attenuate at different speeds over distances for example the effect of human capital depth decays rapidly beyond three miles away from block centroids we conclude that knowledge spillovers are very localized within a microgeographic scope in cities that we call smart cafe cities

spinoffs and the ascension of silicon valley this article analyzes firm entry and performance in the semiconductor industry from the introduction of the integrated circuit ic in 1965 until 1987 during this period the industry which was initially concentrated on the east coast of the united states became increasingly clustered in silicon valley sv california this location shift was accompanied by a change in the technology used to produce semiconductor devices by studying how diversifiers and new firms enter into ic production and the technology they choose to produce ics we document the process of growth of sv in particular we analyze how agglomeration economies as well as the heritage of new firms founders affect the opportunities pursued by entrants and their long term likelihood of success we find that ic entrants in sv were more likely to enter at the technological frontier than ic entrants in other clusters however we find no evidence suggesting that being located in a cluster helped existing ic producers that were not initially at the technological frontier to catch up with the rest of the industry examining long term performance we find that firms that become top producers are disproportionately spinoffs of leading firms or diversifiers with a transistor background while most of these firms were located in sv after controlling for heritage and background location has no significance on the likelihood of becoming a top producer

spatial agglomeration and firm exit a spatial dynamic analysis for italian provinces the paper investigates the effect of spatial agglomeration on firm exit in a dynamic framework using a large dataset at the industry province level for italy 1998 2007 we estimate a spatial dynamic panel model via a gmm estimator and analyze the short run impact of specialization and variety on firm exit specialization negatively affects firm exit rates in the short run the effect is particularly significant for low tech firms the impact of variety on firm mortality rates at the industry level is instead less clear although still negative and significant for low tech firms

multilevel approaches and the firm agglomeration ambiguity in economic growth studies empirical studies in spatial economics have shown that agglomeration economies may be a source of the uneven distribution of economic activities and economic growth across cities and regions both localization and urbanization economies are hypothesized to foster agglomeration and growth but recent meta analyses of this burgeoning body of empirical research show that the results are ambiguous recent overviews show that this ambiguity is fuelled by measurement issues and heterogeneity in terms of scale of time and space aggregation growth definitions and the functional form of the models applied alternatively in this paper we argue that ambiguity may be due to a lack of research on firm level performance in agglomerations this research is necessary because the theories that underlie agglomeration economies are microeconomic in nature hierarchical or multilevel modeling which allows micro levels and macro levels to be modeled simultaneously is becoming an increasingly common practice in the social sciences as illustrated by detailed dutch data on firm level productivity employment growth and firm survival we argue that these approaches are also suitable for reducing the ambiguity surrounding the agglomeration firm performance relationship and for addressing spatial sectoral and cross level heterogeneity

the dynamics of local employment in france we study the impact of local economic structure on employment dynamics local employment is decomposed into the product of the average plant size and the number of plants in the area and industry we estimate the dynamics of both components simultaneously using french yearly data on 36 industries and 341 areas between 1984 and 1993 the careful specification of short run dynamics and the control for fixed effects and endogeneity are shown to be critical in the empirical model first static externalities are prevalent compared to dynamic ones moreover whereas area and industry effects explain most of the spatial variation of plant size the local number of plants is mainly driven by the current local economic structure policies targeted towards plant creation should thus be more efficient for instance large areas endowed with a small number of even size industries have both more and larger plants a large number of plants heterogeneous in size also increases the average plant size but the number of plants is higher when plants have similar size

international macroeconomic policy coordination when policymakers do not agree on the true model the authors relax the assumption of the literature on international coordination that policymakers know the true model t wo countries will still be able to agree on a cooperative policy pack age that each believes will improve the objective function relative t o the nash noncooperative solution however the bargaining solution may move the target variables in the wrong direction these points ar e illustrated with monetary and fiscal multipliers taken from simulat ions of ten leading econometric models out of 1 000 possible combina tions of models that could represent u s beliefs non u s beliefs and the true model monetary coordination improves u s welfare in on ly 546 cases copyright 1988 by american economic association

identifying the local economic development effects of million dollar facilities presented on february 22 2013 from 12 35 pm 2 00 pm in the architecture east building room 217 on the georgia tech campus

firm innovation the influence of r d cooperation and the geography of human capital inputs abstract this paper investigates the role played by the geography of labor inputs in the promotion of innovation knowledge can be transferred between firms by inter firm interactions and inter firm cooperation in addition knowledge can also be transferred between firms by human capital mobility in order to examine these issues we employ a unique innovation dataset from finland this dataset provides information about a firm s innovation performance along with information regarding the origins of a firm s recent labor acquisitions the origins of the labor are defined according to both the industry and the region analyzing these data allows us to identify the different roles which the geography of knowledge exchanges and the geography of labor markets play in the innovation process

traffic congestion s economic impacts evidence from us metropolitan regions traffic congestion alleviation has long been a common core transport policy objective but it remains unclear under which conditions this universal byproduct of urban life also impedes the economy using panel data for 88 us metropolitan statistical areas this study estimates congestion s drag on employment growth 1993 to 2008 and productivity growth per worker 2001 to 2007 using instrumental variables results suggest that congestion slows job growth above thresholds of approximately 4 5 minutes of delay per one way auto commute and 11 000 average daily traffic adt per lane on average across the regional freeway network while higher adt per freeway lane appears to slow productivity growth there is no evidence of congestion induced travel delay impeding productivity growth results suggest that the strict policy focus on travel time savings may be misplaced and instead better outlooks for managing congestion s economic drag lie in prioritising the economically most important trips perhaps through road pricing or in providing alternative travel capacity to enable access despite congestion

national tax systems versus the european capital market capital taxation alberto giovannini the current structure of taxes on capital income across ec countries can be exploited by corporations to reduce tax burdens skilled individuals can indulge in tax avoidance too the liberalization of capital movements stands to turn tax avoidance into a cottage industry this article provides a primer on capital income taxes and describes strategies which reduce the tax burden from a policy perspective the question is how to avoid massive tax evasion after 1992 there is no need to harmonize if the right taxation principle is adopted two principles are contrasted the territorial principle according to which taxes are levied on domestic investment irrespective of the country of residence of the beneficiary and the worldwide principle according to which taxes are levied on domestic savings irrespective of where they are invested it is shown that the worldwide principle involves much fewer distortions than the territorial principle a strict application of this principle would effectively solve the problem of tat evasion in europe without requiring full harmonization of the tax systems its full implementation would require the abolition of withholding taxes the elimination of tax deferrals which are quite pervasive throughout europe and an in depth review of blocking and secrecy laws

the internet and local wages a puzzle how did the diffusion of the internet affect regional wage inequality we examine the relationship between business investment in advanced internet technology and local variation in us wage growth between 1995 and 2000 we identify a puzzle the internet is widespread but the economic payoffs are not advanced internet technology is only associated with substantial wage growth in the 6 percent of counties that were already highly wealthy educated and populated and had it intensive industry advanced internet and wage growth appear unrelated elsewhere overall advanced internet explains over half the difference in wage growth between already well off counties and all others jel j31 l86 o33 r11 r23

quantifying spillover effects from large land based investment the case of mozambique summary almost a decade after a spike in land demand following the 2007 08 commodity boom evidence on impacts of this phenomenon remains limited and mostly case study based we show that information on location and start data of large farms combined with existing smallholder farm surveys allows to complement this with a difference in difference approach to systematically assess spillovers from large farm establishment illustrative application to mozambique suggests positive short term effects from newly established large farms on adoption of agricultural practices and input use by small farms less than 50 km from newly established large operations robustness checks for crop farms only also suggest job creation in the proximity of newly established crop but not livestock farms yet large farm establishment decreased perceived well being within a 25 km band and in the time horizon considered here did not lead to better access to output markets cultivation of larger areas or once other factors are controlled for higher yields this allows us to reject the notion of negative spillovers from large farm establishment but casts doubt on the wisdom of large unconditional subsidies to attract investors in addition to drawing policy conclusions for mozambique we highlight the methodology s wider applicability and scope for expansion

courting economic development we show that court enforcement uncertainty hinders economic development using sharp variation in judiciaries across native american reservations in the united states congressional legislation passed in 1953 assigned state courts the authority to resolve civil disputes on a subset of reservations while tribal courts retained authority on unaffected reservations although affected and unaffected reservations had similar economic conditions when the law passed reservations under state courts experienced significantly greater long run growth when we examine the distribution of incomes across reservations the average difference in development is due to the lower incomes of the most impoverished reservations with tribal courts we show that the relative under development of reservations with tribal courts is driven by reservations with the most uncertainty in court enforcement

technology agglomeration and regional competition for investment technology agglomeration the active courting of firms by municipalities regions and even nations has a long standing history and the competition for firm location through a wide variety of incentives seems to have escalated to new heights in recent years we develop a model that explores technology development by firms that face regional competition for their investment and examine the endogenous determination of regions policies firm technology and agglomeration externalities in particular we find that regional competition leads firms to inefficiently distort their research and development efforts in hopes of improving their standing in the competition amongst regions for their investment this loss in efficiency is aggravated by the agglomeration externalities that are inherently present in many industries we offer several case studies that provide evidence consistent with our theoretical conclusions

invested interests the politics of national economic policies in a world of global finance capital moves more rapidly across national borders now than it has in at least fifty years and perhaps in history this article examines the effects of capital mobility on different groups in national societies and on the politics of economic policymaking it begins by emphasizing that while financial markets are highly integrated within the developed world many investments are still quite specific with respect to firm sector or location it then argues that contemporary levels of international capital mobility have a differential impact on socioeconomic groups over the long run increased capital mobility tends to favor owners of capital over other groups in the shorter run owners and workers in specific sectors in capital exporting countries bear much of the burden of adjusting to increased capital mobility these patterns can be expected to lead to political divisions about whether or not to encourage or increase international capital market integration the article then demonstrates that capital mobility also affects the politics of other economic policies most centrally it shifts debate toward the exchange rate as an intermediate or ultimate policy instrument in this context it tends to pit groups that favor exchange rate stability against groups that are more concerned about national monetary policy autonomy and therefore less concerned about exchange rate stability similarly it tends to drive a wedge between groups that favor an appreciated exchange rate and groups that favor a depreciated one these divisions have important implications for such economic policies as european monetary and currency union the dollar yen exchange rate and international macroeconomic policy coordination

firm location decisions regional grants and agglomeration externalities we examine whether discretionary government grants influence where domestic and multinational firms locate new plants and how the presence of agglomeration externalities interacts with these policy instruments we find that a region s existing industrial structure has an effect on the location of new entrants grants do have a small effect in attracting plants to specific geographic areas but importantly we find that firms are less responsive to government subsidies in areas where there are fewer existing plants in their industry this suggests that these subsidies are less effective in influencing firms location decisions in the face of countervailing co location benefits