Quotation Fischer, Manfred M. 2013. Neoclassical growth theory, regions and spatial externalities. International Conference on Computational Science and its Applications (ICCSA 2013), Ho Chi Minh City, Vietnam, 24.6.-27.06.2013. Invited Talk


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Abstract

The presentation considers the standard neoclassical growth model in a Mankiw-Romer-Weil world with externalities across regions. The reduced form of this theoretical model and its associated empirical model lead to a spatial Durbin model, and this model provides very rich own- and cross-partial derivatives that quantify the magnitude of direct and indirect (spillover or externalities) effects that arise from changes in region's characteristics (human and physical capital investment or population growth rates) at the outset in the theoretical model. A logical consequence of the simple dependence on a small number of nearby regions in the initial theoretical specification leads to a final-form model outcome where changes in a single region can potentially impact all other regions. This is perhaps surprising, but of course we must temper this result by noting that there is a decay of influence as we move to more distant or less connected regions. Using the scalar summary impact measures introduced by LeSage and Pace (2009) we can quantify and summarize the complicated set of non-linear impacts that fall on all regions as a result of changes in the physical and human capital in any region. We can decompose these impacts into direct and indirect (or externality) effects. Data for a system of 198 regions across 22 European countries over the period 1995 to 2004 are used to test the predictions of the model and to draw inferences regarding the magnitude of regional output responses to changes in physical and human capital endowments. The results reveal that technological interdependence among regions works through physical capital externalities crossing regional borders.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title Neoclassical growth theory, regions and spatial externalities
Event International Conference on Computational Science and its Applications (ICCSA 2013)
Year 2013
Date 24.6.-27.06.2013
Country Viet Nam
Location Ho Chi Minh City
URL http://www.iccsa.org
Invited Talk Y

Associations

People
Fischer, Manfred M. (Details)
Organization
Research Institute for Supply Chain Management FI (Details)
Institute for Economic Geography and GIScience IN (Details)
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