This paper presents some new estimates of the degree of returns to scale for European regional manufacturing, for the period 1986-2002. To obtain these estimates, the paper makes use of a Verdoorn law framework, estimating both demand-and supply-side versions of the law. Estimation is further embedded within a spatial econometric framework that allows for both "substantive" and "nuisance" sources of spatial autocorrelation. The former arises from cross-regional spillovers in the growth process, whilst the latter is a result of the use of the administrative NUTS1 definition of regions. Whilst the demand-side version of the Verdoorn law yields estimates of substantial increasing returns, the supply-side version is unable to refute the hypothesis of constant returns. It is argued, however, that the demand-side version is to be preferred on a priori grounds. The paper also gives consideration to the staticdynamic Verdoorn law paradox and successfully tests a recently proposed explanation of this paradox.JEL codes: O18, O33, R11
The aim of this paper is to deal with the empirical aspects of the 'new' monetary policy framework, known as Inflation Targeting. Applying Intervention Analysis to multivariate Structural Time Series models, new empirical evidence is produced in the case of a number of OECD countries,. These results demonstrate that although Inflation Targeting has gone hand-in hand with low inflation, the strategy was introduced well after inflation had begun its downward trend. But, then, Inflation Targeting 'locks in' low inflation rates. The evidence produced in this paper suggests that non-IT central banks have also been successful on this score.
Using data envelopment analysis, we calculate indices of total factor productivity (TFP), efficiency and technological change for the manufacturing sectors of 68 European NUTS1 regions over the period 1986-2002. We subsequently examine these indices using exploratory spatial data analysis (ESDA) techniques, before considering tendencies towards convergence in both TFP and technical efficiency levels. While the ESDA reveals significant spatial autocorrelation, the convergence analysis uncovers no tendency for regions with initially lower TFP to catch up with regions with initially higher TFP. However, convergence is found in levels of technical efficiency, although towards a relatively lower average level. IIn the run-up to the establishment of a common currency in the European Union (EU), prominence was given to the desirability of convergence in certain nominal or monetary variables. However, in the face of less than fully flexible wages, the removal of intra-European exchange rates poses problems for unemployment, especially if money wages are set at the European level, unless there is a rapid convergence in productivity levels. If there were divergence, rather than convergence, this would result in increasing disparities in both national and regional per capita income. Claims on the limited EU structural funds and greater regional tensions might then be intensified. Consequently, it is important to determine whether convergence or divergence, if either, can be discerned in recent EU national and regional growth performance.One approach has been to estimate the rate of convergence implied by the standard Solow growth model. Studies of the EU regions that have followed this course have estimated the rate of absolute b convergence in per capita income (see, inter alia, Armstrong, 1995; Barro and Sala-i-Martin,
Verdoorn's law is estimated in a spatial econometric framework for individual manufacturing industries using EU regional data. Estimates of encompassing returns to scale are large, but other explanatory variables, including measures of industrial specialization and diversity, tend to be insignificant. The method of normalization with either output or input growth as the regressor matters, and the use of an instrumental variable approach does not resolve this problem. As in other studies, the static-dynamic Verdoorn law paradox exists. A theoretical argument is made, however, that the dynamic Verdoorn law is the correct specification and this is confirmed empirically. Rendements croissants et croissance des industries dans les régions de l'UE: paradoxes et énigmes Résumé La loi de Verdoorn est estimée dans un cadre conceptuel économétrique spatial pour les industries de fabrication individuelles en utilisant des données régionales de l'UE. Les estimations des rendements croissants à l’échelle, englobant, sont importantes, mais d'autres variables explicatives, comprenant des mesures de spécialisation et de diversité industrielles, ont tendance à être insignifiantes. La méthode de normalisation utilisant comme variable indépendante soit la croissance d'entrée soit celle de sortie importe, et l'utilisation d'une approche IV ne résout pas ce problème. Comme dans d'autres études, le paradoxe statique-dynamique de la loi de Verdoorn est présent. Cependant, dans un argument théorique, nous avançons que la loi de Verdoorn dynamique est la spécification correcte, ce qui est confirmé empiriquement. Aumento de las ganancias y crecimiento de la industria en las regiones de la UE: paradojas y acertijos Résumén Se estima la Ley de Verdoorn en un marco econométrico espacial para empresas manufactureras individuales usando los datos regionales de la UE. Las estimaciones para las ganancias englobadas a escala son grandes, pero otras variables explicativas, incluyendo las medidas de especialización y diversidad industrial, tienden a ser insignificantes. Importa el método de normalización ya sea usando crecimiento de ganancias o entradas como regressor, y el uso de un enfoque IV no resuelve este problema. Al igual que en otros estudios existe la paradoja estática-dinámica de la ley de Verdoorn. Sin embargo, se argumenta teóricamente que la dinámica ley de Verdoorn es la especificación correcta y esto se confirma empíricamente.Increasing returns, Verdoorn's law, manufacturing, productivity growth, spatial econometrics, O18, O33, R11,
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.