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Geographic spillover and growth (a spatial econometric analysis for european regions)

Catherine Baumont, Cem Ertur and Julie Le Gallo ()
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Catherine Baumont: LATEC - Laboratoire d'Analyse et de Techniques Economiques - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique

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Abstract: The aim o f this paper is to integrate the geographical dimension o f data in the estimation o f the convergence o f European regions and emphasize the importance o f spatial effects in regional economic growth phenomena. In a sample o f 122 European regions over the 1980-1995 period, we find strong evidence o f spatial autocorrelation in the unconditional /^-convergence model using spatial econometric methods with different weight matrices: a simple contiguity matrix and 4 distance-based matrices. Therefore, this standard beta-convergence model exhibit misspecification, its estimation by OLS leads to inefficient estimators and invalid statistical inference. We suggest then a "minimal" specification o f beta-convergence, which integrates and treats adequately the spatial autocorrelation detected.. Moreover, this model is interpreted as a conditional /^-convergence model revealing a spatial spillover effect between European regions. Therefore the European regions are interdependent and we show by a simulation experiment that a random shock affecting a given region propagates to all the regions o f the sample.

Keywords: Economic theory; Management economics; Economics; Management; Economie; Gestion (search for similar items in EconPapers)
Date: 2000
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Published in [Research Report] Laboratoire d'analyse et de techniques économiques(LATEC). 2000, 29 p., Table, ref. bib. : 2 p

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Working Paper: Geographic Spillover and Growth. A Spatial Econometric Analysis for European Regions (2000) Downloads
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