A spatial panel data version of the knowledge capital model

Christian Sommeregger, Christoph Hammer (), Daniel Bekesi and Matthias Koch ()

ERSA conference papers from European Regional Science Association

Abstract: This paper attempts to analyze the impact of knowledge and knowledge spillovers on regional total factor productivity (TFP) in Europe. Regional patent stocks are used as a proxy for knowledge, and TFP is measured in terms of a superlative index. We follow Fischer et. al (2008) by using a spatial-spillover model and a data set covering 203 regions for six time periods. In order to estimate the impact of knowledge stocks we use a spatial autoregressive model with random effects, which allows for three kinds of spatial dependence: Spatial correlation in the innovations, the exogenous and the endogenous variables. The results suggest that there is a significant positive impact of knowledge on regional TFP levels, and that knowledge spills over to neighboring regions. These spillovers decay exponentially with distance at a rate of 8%. Using Monte Carlo simulations we calculate the distribution of direct and indirect effects. The average elasticity of a region's TFP with respect to its own knowledge stock is 0.2 and highly significant. The average effect of all other regions' TFP is about 50% higher, which confirms that the cross-country externalities are important in the measuring of the impact.

Date: 2011-09
New Economics Papers: this item is included in nep-eff, nep-geo, nep-knm and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa11p727

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