Micro- and Macroeconomic Impacts of a Place-Based Industrial Policy

Enghin Atalay, Ali Hortaçsu, Mustafa Runyun, Chad Syverson and Mehmet Ulu

No 31293, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the impact of a set of place-based subsidies introduced in Turkey in 2012. Using firm-level balance-sheet data along with data on the domestic production network, we first assess the policy’s direct and indirect impacts. We find an increase in economic activity in industry-province pairs that were the focus of the subsidy program, and positive spillovers to the suppliers and customers of subsidized firms. With the aid of a dynamic multi-region, multi-industry general equilibrium model, we then assess the program’s impacts. Based on the calibrated model we find that, in the long run, the subsidy program is modestly successful in reducing inequality between the relatively under-developed and more prosperous portions of the country. These modest longer-term effects are due to the ability of households to migrate in response to the subsidy program and to input-output linkages that traverse subsidy regions within Turkey.

JEL-codes: D20 E2 E6 H5 L5 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-ara and nep-ure
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Citations: View citations in EconPapers (2)

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Working Paper: Micro- and Macroeconomic Impacts of a Place-Based Industrial Policy (2023)
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