We analyze the resilience of U.K. regions to employment shocks. Two basic notions of resilience are distinguished. With engineering resilience, there is an underlying stable growth path to which a regional economy rebounds following a shock. With ecological resilience, shocks can permanently affect the growth path of the regional economy. Our data set consists of quarterly employment series for 12 U.K. regions (NUTS I) for the period 1971-2010. Using a seemingly unrelated regression (SUR) model specification, we test for the relevance of (engineering) resilience of U.K. regional employment to the four recessionary shocks in our sample. It turns out that U.K. regions do indeed differ in their resilience, but that these differences mainly concern the initial resistance to these shocks and not so much the recovery stage. The SUR model does not allow shocks to have permanent effects and it also does not take the possibility of time differentiated shock spillovers between the 12 regions into account. To this end, we also estimate a vector error-correction model (VECM) specification where employment shocks can have permanent effects and where also interregional employment linkages are included. We find that employment shocks typically have permanent effects when it concerns the own-region effects. Permanent effects can also be found for the impact on other regions but the interregional effects are typically only significant for nearby regions.
It is a stylized fact that city size distributions are rather stable over time. Explanations for city growth and the resulting city-size distributions fall into two broad groups. On the one hand there are theories that assume city growth to be a random process and this process can result in a stable city-size distribution. On the other hand there are theories that stress that city growth and the city-size distribution are driven by economically relevant differences between locations. These differences might be the result of physical differences or might be caused by location specific increasing returns or externalities. We construct a unique data set to analyze whether or not a large temporary shock had an impact on German city growth and city size distribution. Following recent work by Davis and Weinstein (2001) on Japan, we take the strategic bombing of German cities during WWII as our example of such a shock. The goal of this paper is to analyze the impact of this shock on German city-growth and the resulting citysize distribution. If city-growth follows a random walk this would imply that the war shock had a permanent impact on German city-growth. If, however, as the second group of theories predicts, the random walk hypothesis is not confirmed this would mean that the war shock at most had a temporary effect on the city growth process. Our main finding is that city growth in western Germany did not follow a random walk, while city growth in eastern Germany did follow a random walk. Different postwar economic systems are most likely responsible for this outcome.
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The need for a better understanding of the role location plays in economic life was first and most famously made explicit by Bertil Ohlin in 1933. However it is only recently, with the development of computer packages able to handle complex systems, as well as advances in economic theory (in particular an increased understanding of returns to scale and imperfect competition), that Ohlin's vision has been met and a framework developed which explains the distribution of economic activity across space. This book is an integrated, non-mathematical, first-principles textbook presenting geographical economics to advanced students. Never avoiding advanced concepts, its emphasis is on examples, diagrams, and empirical evidence, making it the ideal starting point prior to monographic and journal material. Contains copious computer simulation exercises, available in book and electronic format to encourage learning and understanding through application. Uses case study material from North America, Europe, Africa and Australasia.
The aim of this paper is to test for the relevance of spatial linkages for Dutch (outbound) foreign direct investment (FDI). We estimate a spatial lag model for Dutch FDI to 18 host countries. After controlling for fixed effects, we find for our sample period 1984-2004 that third-country effects matter. Apart from our benchmark spatial lag model, we also estimate various alternative models by looking at European host FDI countries only, by dividing FDI into industry and services FDI, and by estimating a spatial error model.
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