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Spatial dynamics and growth rate volatility of European regions

Gianmoena , Lisa (2014) Spatial dynamics and growth rate volatility of European regions. Advisor: Pammolli, Prof. Fabio. Coadvisor: Ticchi, Prof. Davide . pp. 125. [IMT PhD Thesis]

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Abstract

Chapter 1: is the reproduction, with some extensions, of the paper The Determinants of Growth Rate Volatility in European Regions. It is a joint work with Angela Parenti (IMTLucca, Italy) and Prof. Davide Fiaschi (University of Pisa, Italy). This paper investigates the determinants of growth rate volatility (GRV) of per capita GDP in a sample of 257 NUTS-2 European regions in the period 1992 − 2008. An exploratory analysis shows a downward trend of GRV during the whole period, with the presence of three peaks in the cross section distribution in every year. Moran scatter plot highlights a clear spatial pattern of the GRV in 2008, confirming a geographical clusterization of regions with higher and lower volatility. We propose a theoretical framework for the study of regional GRV in presence of spatial dependence and wee apply the generalized spatial two stage least squares (GS2SLS) technique which allows to deal with both spatial dependence and potential endogeneity of regressors. As determinants of growth rate volatility, we explore the role played by the size of the economy, output composition, fiscal policy, monetary policy and finally the effects of the European Monetary Union (EMU). Empirical results suggest that output composition and the household expenditure on GDP have important asymmetric effects on GRV. The size of the economy reduces the volatility, while inflation increase the volatility only when GRV is generated by negative shocks. A symmetric effect is found for fiscal policy, where the government expenditure reduces volatility due to both positive and negative shocks. Chapter 2: is the reproduction of the article An Index of Growth Rate Volatility: Methodology and Application to European Regions. It is a joint work with Irene Brunetti (University of Pisa, Italy), Angela Parenti (IMTLucca, Italy) and Prof. Davide Fiaschi (University of Pisa, Italy). This paper proposes a novelmethodology tomeasure growth rate volatility by an index based on Markov matrices. This index allows to control for the frequency of fluctuations, their persistence and size, and its addictive nature also permits to identify the individual contribution of negative and positive fluctuations to overall volatility. The application of the proposed methodology to a sample of 257 European regions belonging to the most of EU 27 countries for the period 1992- 2008 shows that growth rate volatility displays a very significant spatial pattern, with the most volatile regions in the Eastern Europe, Greece and Scandinavian countries, and with the highest incidence of negative fluctuations in the Spanish and Scandinavian regions. The economic size and the output composition of regions are the main explanatory factors of their growth rate volatility; but, weighting more large fluctuations in the calculation of index, also regional investment rates and the size of country domestic credit have some explanatory power. Finally, the prevalence of negative fluctuations is explained by regional investment rates and output composition. Chapter 3: is the reproduction of the article Local Directional Moran Scatter Plot. It is a joint work with Prof. Davide Fiaschi (University of Pisa, Italy) and Angela Parenti (IMTLucca, Italy). This paper identifies the presence of spatial clubs in a sample of 254 European regions in the period 1991-2008 by a new methodology based on nonparametric approach, and disentangles the contributions of spatial spillovers versus crossregion heterogeneity in their formation. In particular, three spatial clubs have emerged: one populated by regions belonging to the former Eastern Bloc countries, one by regions of PIGS countries (Portugal, Italy, Greece and Spain) and the last one by regions of other EU countries (notably Germany, France, UK and Northern Europe countries). A dynamic extension of the Moran scatter plot, consisting in a non parametric estimate of the joint dynamics of GDP per worker and its spatial lag, suggests that in the long run the convergence should happen only to two spatial clubs with Eastern regions converging to PIGS regions. Spatial spillovers are present across European regions, and their contribution to the emergence of spatial clubs is remarkable. Heterogeneity in human capital has a very limited impact on the distribution of GDP per worker.

Item Type: IMT PhD Thesis
Subjects: H Social Sciences > HB Economic Theory
PhD Course: Economics, Markets, Institutions
Identification Number: 10.6092/imtlucca/e-theses/149
Date Deposited: 15 Jan 2015 14:38
URI: http://e-theses.imtlucca.it/id/eprint/149

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