Monetary policy and regional economic performance in Mexico: A structural panel VAR approach

The aim of this article is to investigate the dynamic effects of monetary policy shocks on economic activity and aggregate price levels across Mexican states. To do this, a recursive structural panel VAR model is implemented as proposed by Pedroni which allows for regional heterogeneity and structural identifying restrictions of common monetary policy shocks. Empirical evidence suggests a common monetary policy shock to short‐term interest rates induces significant cross‐state variation in prices and output level responses. Additional analysis indicates that structural features, such as the industry mix and the small versus large firm mix, are possible sources of the observed cross‐state variation influenced by interest rates and credit channels. We conclude that the observed differentiated regional impacts are sufficiently important to justify rethinking Mexico's current monetary policy framework in order to explicitly consider a regional view.     

The Empirical Study of Monetary Transmission Mechanism in China During the Transformed Period

This paper follows the Cointegration Test and Granger Causality Test based on the Vector Auto-regression Model to estimate the impacts of monetary channel and bank-lending channel on macro-economy respectively and investigates the different effects of the two channels on the latter using the OLS during the 1994 - 2002 sample period in which the monetary policy was transformed from being directly-controlled to being indirectly-controlled by the central bank in China. The result shows that the monetary channel and the bank-lending channel are both the important channels of Chinese monetary transmission, while the impact of latter on macro-economy is stronger. So the bank-lending channel plays a dominant role in the monetary transmission in China. Policy implications are made in the conclusion.     

Regional inflation persistence in Turkey

The purpose of the current study is to investigate the degree of inflation persistence, its geographical variation, sources of cross‐regional variation, and presence of geographical/sectoral aggregation bias in national monetary policy. Our data set covers 26 NUTS‐2 level Turkish regions and monthly CPI inflation over the period 2003–2019. We first estimate the degree of regional inflation persistence by autoregressive regressions, check its robustness against the presence of structural breaks (by Bai–Perron's algorithm) and nonlinearities (by Markovian Regime Switching regressions). Second, we examine the possibility of geographical and sectoral aggregation bias. Third, we investigate the cross‐regional determinants of inflation persistence by panel data analysis, employing hybrid‐effects spatial panel regressions. We analyze the direct and indirect effects of the determinants and test for regional spillover effects. Three main results are obtained. First, estimated persistence degrees are heterogeneous across regions. The geographical pattern is empirically robust against structural breaks and nonlinearities. We find that inflation persistence is distributed in a spatially correlated manner. Second, when sectoral and regional aggregation bias is tested, only sectoral aggregation indicates a considerable level of bias. Third, we find that the presence of large firms in the region and a higher share of agricultural output in GDP leads to lower persistence, while an increased share of industrial output, and increased trade volume leads to higher inflation persistence. Moreover, we find spatial spillovers of price variability evident in regression analysis. From a policy standpoint, it is required that structural policy programs are targeted to maintain flexibility in the regions where persistence is high (i.e., providing market entry/exit, institutional quality, policy credibility, stimulation of SMEs). Moreover, sectors that have high persistence, such as Hotels and Restaurants (persistence degree 0.55) and Health Services (0.39) should be weighted more in CPI calculations.     

The Analysis of Impulse Response of Bank Landing to the Impact of Monetary Policy in China

Abundant researches approve that the bank-lending channel is the main monetary transmission channel in China recent years. But the most of investigations only focus on the behavior of the gross bank-lending index in the monetary transmission, and the further investigation hasn't been carried on. This paper divides the gross index of bank lending into the short-term and mid-, long-term loans based on the internal and external researches. It analyzes how the financial institutions adjust their lending policy under the impact of the monetary policy of the central bank and the effect of the adjustments on the macroeconomic, making the further study of the bank-lending channel in monetary transmission in China.     

Research and development intensive clusters and regional competitiveness

Modern cluster theory provides reasons for positive external effects that accrue from the interaction of spatially proximate firms operating in common and related fields of economic activity. In this paper, we examine the impact of R&D-intensive clusters as a key factor of regional competitiveness on productivity growth. In relying on a hybrid approach of cluster identification, we examine effects of cluster specialization and diversity for a panel of German NUTS-3 regions in 2003–2019. After controlling for regional characteristics and unobserved heterogeneity, a robust cluster strength effect (i.e., specialization) on productivity growth is found within the context of conditional convergence across German regions. With regard to the underlying mechanisms, we find that the presence of multiple R&D-intensive clusters in specific technological fields is most strongly linked to higher levels of regional productivity growth. We also find that advantages from cluster specialization are strongest in key industrial sector such as automobile production, machinery, chemical and pharmaceutical products. Overall, our estimates particularly highlight the working of Marshallian externalities in productivity dynamics, while Jacobs-type spillovers tend to be partially realized. These findings indicate that some but not all cluster-based regional development strategies are promising policy tools to foster regional growth processes.     

The Returns to Migration: The Influence of Education and Migration Type

We show the impact of migration type on real wages over time. We create a migration and earnings history from the National Longitudinal Survey of Youth over the period 1979–2002. We estimate the effects of primary, onward, and two types of return migration on real wages using a panel data model with individual, location, and time fixed effects. Panel data are well suited for the study of the returns to U.S. internal migration because the influence of migration on wages has been found to occur years after the event. We differentiate return migration into two types: return to a location with ties that form a geographical anchor (“home”) and return to a prior place of work. We find that real wage growth varies by migration type. Education attainment is a significant factor in real wage growth. Our results show that onward migration is an important channel by which the monetary rewards to a college education are manifested.     

Great Recession and club convergence in Europe: A cross-country,cross-region panel analysis (2000–2015)

The paper aims at investigating the impact of the Great Recession on per capita GDP convergence process across European regions and countries. Using the time-varying factor model developed by Phillips and Sul for the period 2000–2015 and two different merging procedures to identify clubs, we provide evidence of the diverging impact of the Great Recession “between” the higher and the lower convergence clubs at both regional and country levels as well as of the strengthening of the convergence process “within” most clubs. In addition, we add further evidence to the common belief of a “multi-speed” Europe by contrasting Eastern European countries' and regions' behavior vis-à-vis original European members' one, and by identifying the factors that affect club membership and resilience to the recent economic downturn. We find that the membership in the higher clubs and resilience to the Great Recession are positively affected by the presence of several local-specific factors and macroeconomic characteristics.     

Creative Industries and Regional Productivity Growth in the Developing Economy: Evidence from Indonesia

This paper examines the degree to which creative industries stimulate regional productivity growth in a developing country, Indonesia. The Indonesian government promotes long‐established “traditional” craft businesses as creative industries, but they pay less attention to new knowledge creation and focus on highlighting heritage values as selling points. Our findings show that the “real” creative industries are still scarce and found mostly in fairly advanced urban regions. These industries are more likely to be an indicator than a driver of regional economic development. Meanwhile, those traditional businesses are much larger than creative industries and potentially contribute to regional productivity through consumption activities, thereby requiring different policy strategies.     

Drivers of Regional Efficiency Differentials in Italy: Technical Inefficiency or Allocative Distortions?

This paper estimates regional economic efficiency differentials at the firm level for the Italian manufacturing sector in the period 1998–2003. We implement an input distance‐function approach providing measures of both technical inefficiency and allocative distortions in the choice of input mixes. Our results confirm the substantial technical efficiency gap suffered by firms located in Southern regions, thus providing empirical support for the “structural and technological gap” interpretation of Italian dualism. On the other hand, the allocative distortions in the use of inputs show less‐remarkable regional differences. In terms of policy, our results suggest the need for a reallocation of public resources for development policies from business incentives to public investment.     

Impact of Chinese market segmentation on regional collaborative governance of environmental pollution: A new approach to complex system theory

The market segmentation among local governments under decentralization of China not only directly triggered the “fragmentation” of regional development, but also hindered collaborative actions in environmental governance. This study adopts a new method to calculate regional environmental collaborative governance using a synergy degree model of a complex system, and then it empirically analyzes the impact of Chinese market segmentation. We find that the regional environmental collaborative governance in China shows a growing trend during the period of investigation, but the level is still low. Market segmentation has significantly inhibited the regional collaborative governance of environmental pollution among local governments of China. The effect of market segmentation on the order of personnel input and capital input is significantly negative, while the effect on the order of policy input and organizational input is not significant. In the areas where the air pollution and water pollution are serious, the effect of market segmentation is also significantly negative. The conclusions are helpful to understanding the institutional factors that hinder regional environmental collaborative governance in China more comprehensively, and provide insights for improving the performance of environmental governance.     

Firm employment growth in China: The role of marketization and regional economic factors

Very heterogeneous patterns of firm employment growth characterize the Chinese provinces, suggesting the existence of a relationship between these and regional factors. This empirical work explores this topic by providing novel evidence of the role played by regional institutional and regional factors in firm employment growth in China during the decade 1998–2007, an important period in the Chinese transition towards a market economy. The results show that controlling for the internal determinants of firm performance, the firms located in provinces converging faster towards a market economy, exhibiting relatively better patterns (in terms of agglomeration, endowment of human capital, innovation and environmental protection) tend to expand their employment relatively more. These findings confirm the existence of a macro–micro-connection as to what firm heterogeneity is concerned, as they reveal a differential growth channel along the regional dimension. In particular, local progress in government–market relationships appears as the most relevant dimension of marketization process. Given the regionally decentralized institutional system in China and considering its process of transformation, these findings inform local authorities concerned with the promotion of regional employment.     

What drives the labor share of income in South Korea? A regional analysis

This study takes a regional approach to analyzing what drives labor's share of income for South Korea over 2000–2014. First, we document empirically that changes in the labor share within a region are the dominant component of the change in the aggregate labor share of national income. To study the dynamic determinants of the labor share of income at the regional level, a panel vector autoregression (PVAR) model is estimated to examine how the regional labor share responds to innovations in an array of variables suggested by theoretical models. Consistent with theory, we confirm that technology, capital intensity and market concentration are the key variables explaining the labor share dynamics. Furthermore, we analyze the effects of trade openness and R&D expenditures on the regional labor share. Interestingly, we find that the labor share shows a different pattern of responses to the identified shocks depending upon the type of regions, that is, whether it is in the metropolitan or provincial areas. We also discuss the implications of our results for both theory and policy.     

Regional Equality and National Development in China: Is There a Trade‐Off?

Despite high economic growth over the past 30 years, China's substantial and persistent regional disparities have been the subject of continuing concern to policy makers, as well as the target of a wide variety of policies. An important issue in the policy debate about whether and how best to attack these disparities is whether measures designed to improve regional equality come at a cost to national development, i.e., whether there is a trade‐off between the level of national output and the equality of its distribution across the regions. There is little analysis of this issue in the literature. We help fill this gap by setting up a two‐region model designed to capture some of the salient features of the Chinese economy. We subject this model to a number of policy shocks and assess the effects on regional disparities in per capita output, on the one hand, and on aggregate output on the other to investigate the trade‐off. We also consider income and welfare as alternatives to output. We find, first, that disparities in per capita output, income, and welfare may move in different directions so that it is important to specify which disparity is being targeted. Second, since both disparities and aggregate outcomes are endogenous, how they move together depends on the nature of the shock driving the model. Thus, some policies designed to reduce disparities face a trade‐off and others do not. Only a reduction in internal migration restrictions unambiguously reduces all three disparity measures and increases aggregate output, income, and welfare. All other policies considered face a trade‐off in at least one dimension. Third, whether there is a trade‐off depends also on the time horizon—some policies face a trade‐off in the short run and not in the long run and vice versa.     

Regional Economic Convergence in Mexico: An Analysis by Industry

ABSTRACT Existing studies of convergence across jurisdictions of a nation have focused on developed economies. A key assumption underlying regional convergence is geographical factor mobility, and in a developed economy, mobility is facilitated by low transportation costs. By the same token, convergence in a less-developed economy may be impeded by the absence of a well-developed transportation infrastructure. We examine the rate and industrial composition of economic convergence in a neighboring less-developed country (LDC), Mexico, to examine how it might have differed from the U.S. experience. We find evidence of stronger convergence in Gross State Product per capita in Mexico relative to existing estimates of U.S. convergence. Further, while manufacturing activity has been found to be a primary source of convergence in the U.S., we find weaker evidence of convergence of manufacturing activity in Mexico. On the other hand, industries such as hotels and transportation were found to be significantly influential in regional convergence in the Mexican economy.     

“Space Obesity”: The Effect of Remoteness on County Obesity

We test if remoteness of a county is one of the environmental factors that contribute to obesity. First, we employ geographically weighted regressions (GWRs) that allow us to observe local or regional patterns. We find that county obesity rate is spatially non‐stationary, remoteness affects county obesity rates, and there are spatial heterogeneities in how distance affects county obesity rates. Next, we refine our estimates of the effect of remoteness on county obesity rate using a random effect model that accounts for county‐level unobserved heterogeneity. Even after accounting for these heterogeneities and state fixed effects, we find measurable impact of remoteness on county obesity rate. Splitting the sample into metro and non‐metro counties, we find that remoteness matters more for the obesity rates in the metro counties.     

Southeast Asia's transboundary haze pollution: Unravelling the inconvenient truth

This paper examines the political intricacies inherent in the management of Southeast Asia's transboundary haze pollution. It argues for a scalar perspective in understanding the complexities of the haze problem. The so‐called ‘inconvenient truth’ is unravelled by teasing out some issues in the national and regional political ecologies, and the challenges of synchronising co‐operation at the national, regional and global scales. Discussion shows that the ‘environment’ takes on different meanings at each scale, and both Indonesia and the Association of Southeast Asian Nations (ASEAN) need to recognise this in order to engage more effectively with the transboundary environmental issue. Specifically, inadequate management of forest resources in Indonesia, ASEAN's principle of ‘non‐interference’ and a lack of a holistic ecosystem perspective are amongst some of the interconnected issues addressed. The paper calls for a greater awareness of structural weaknesses in the management of forest resources and a change in ASEAN's environmental paradigm to a more holistic ecosystem perspective that prioritises not just environmental and human health, but also a healthy and sustainable ecosystem.     

Transport and the rural economy: Institutions and institutional change in Ambeso Village,Indonesia

This paper is concerned with the interaction between transport improvements and the rural economy. An institutional approach, based primarily on the new institutionalism theory, was used as the theoretical basis for the analysis. Using the evidence from Ambeso Village of Tana Toraja District, Indonesia, the paper examines the way transport improvements have been introduced and provided opportunities for positive change as well as individual responses to these opportunities. The paper ends by emphasising the role of institutions in the interaction between transport and the rural economy and the need for transport policy and research to transcend its traditional boundaries and address the complexities of institutions and institutional change.     

The Dynamic Effects of Entrepreneurship on Regional Economic Growth: Evidence from Canada

Facilitating entrepreneurship to address regional income disparity continues to be a major concern of policy makers across the globe. This study explores the temporal pattern of income disparity for Canadian provinces in two estimation steps. First, an econometric growth regression model is applied to identify the impact of entrepreneurship on regional economic growth. The estimation results suggest that entrepreneurship, measured in terms of the self‐employment rate, plays a pivotal role in determining regional development in Canada. Second, a dynamic vector autoregression model is employed to simulate long‐run regional growth effects that result from policy shocks affecting entrepreneurship. Compared to other growth drivers, entrepreneurship is found to have more pronounced and long‐term stimulative effects on regional development for the period of 1987–2007.     

The Impact of NAFTA on Mexico's Environmental Policy

A major controversy during the debate over the North American Free Trade Agreement focused on the impact of NAFTA on Mexico's environment. This paper examines the evidence of impact specifically on Mexico's environmental policy. Criteria of impact are developed, and comparisons made for three periods: before 1990 as the baseline period; 1990-93 when NAFTA was being negotiated; and beginning in 1994 when NAFTA came into effect. Much evidence indicates that Mexico's environmental policymaking and enforcement did improve in the early 1990s while NAFTA was being debated. Some evidence also suggests that the NAFTA-influenced environmental commitment was sustained during the 1995 financial crisis. Thus, it is concluded that NAFTA has contributed significantly to Mexico's environmental policy.     

Is air pollution detrimental to regional innovation? Evidence from Chinese cities

Could the negative effect of air pollution be a threat to regional innovation and stunt economic growth in the most polluted Chinese cities? Considering that the generation of innovation can greatly rely on skilled workers and their productivity, this paper examines the association between air quality and regional innovation. An instrumental variable for air quality—the central heating policy—is used to address potential endogeneity problems. The results suggest a growing negative and significant impact of air pollution on city-level innovation. A corresponding mechanism analysis rules out the possibility that self-selection of skilled workers has accounted for the negative impact of air pollution on innovation and consequently infers that the productivity effects may have explained the negative impact.