Working Paper #03.19 now available

By Jonathan Eberle and Philipp Boeing.

The Working Paper #03.19 “Effects of R&D subsidies on regional economic dynamics: Evidence from Chinese provinces” is now online and available here  for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.

Abstract

We investigate the impact of research and development (R&D) subsidies on R&D inputs of large- and medium-sized firms and on additional innovation and economic activities in Chinese provinces. A panel vector autoregressive (VAR) model and corresponding impulse response function (IRF) analysis allow us to differentiate between direct and indirect effects, which add up to total effects. We find that an increase of R&D subsidies significantly decreases private R&D investments, although there is a significant positive effect on the R&D personnel employed in firms. We interpret these findings as a partial crowding-out effect because public funds substitute some private funds while total R&D inputs still increase. Complementarily, we find a positive secondary effect on the provincial patent activity, our measure of technological progress. Interestingly, we also find potentially unintended effects of R&D subsidies on increases in the investment rate in physical capital and residential buildings. Although R&D subsidies fail to incentivize private R&D expenditures, firms increase total R&D inputs, and provincial economies benefit from secondary effects on technological progress and capital deepening.

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Working Paper #02.19 now available

By Sven Wardenburg and Thomas Brenner.

The Working Paper #02.19 “The impact of place-based policies on perceived regional living conditions across German labor market regions. Examining the impacts on migration flows.” is now online and available here  for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.

Abstract

The paper analyzes the impact of the two major German regional development and redistribution policies, the municipal fiscal equalization scheme and the economic funds GRW, on perceived regional living conditions, measured through interregional migration between German labor market regions. Using a spatial vector-autoregressive panel model (SpVar), we find evidence that equalization transfers have a significant positive impact on perceived living conditions and contribute to the aim of regional equity. These effects are especially found for regions with low endogenous fiscal capacities. GRW funding reveals no significant effects on net migration rates in total, but short-term effects in rural regions.

Working Paper #01.19 now available

By Jonathan Eberle.

The Working Paper #01.19 “Regional fiscal equalization in Germany – A simultaneous equation approach to assess the economic effects of fiscal policy” is now online and available here  for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.

Abstract

Regional fiscal equalization in Germany aims to reduce fiscal disparities by allocating financial resources to less promising regions in order to support the supply of public goods. This paper aims to analyse secondary economic effects of regional fiscal equalization on several economic in- and output variables. Additionally, the paper examines the potential regional characteristics to influence the transformation of fiscal inputs into economic outcomes. Lastly, I compare the effects of fiscal equalization to these of the major German structural funding program GRW. My findings reveal a significant positive effect of fiscal equalization on the regional employment rate. Moreover, the findings suggest different transmission channels of fiscal equalization in East and West Germany. Particularly, I find higher effects in right-wing CDU/CSU preferring regions on the employment, human capital and private-sector investment rate. Finally, while structural funding affects more economic variables significantly, the magnitude of the estimated economic responses of fiscal equalization compared to these of German structural funding are not statistically different.

Working Paper #03.18 now available

By Jonathan Eberle, Thomas Brenner and Timo Mitze.

The Working Paper #03.18 “Absorptive capacity, economic freedom and the conditional effects of regional policy” is now online and available here  for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.

Abstract

This paper analyzes the role played by regional conditioning factors, namely absorptive capacity and economic freedom, for the working of regional policy in Germany. We construct synthetic composite indicators to measure differences in these factors across German regions and stratify regions by their respective values. We then identify the subsample-specific transmission channels of regional policies in a spatial panel vector-autoregressive (VAR) framework and compare the direction and magnitude of effects by impulse-response function analysis and ex-post t-tests. The results point to two main channels of policy impact: While regions with low levels of absorptive capacity and economic freedom bene-fit from public funding only in terms of a traditional funding channel (i.e. higher investment rates and partly increased human capital levels), the link between regional policy, GDP and technology growth is very weak for these regions. In comparison, our findings hint at significant positive effects on regional GDP per workforce and patent activity for regions with a high absorptive capacity and economic freedom (i.e. a knowledge-based funding channel). This underlines the role of regional conditions for the direction and magnitude of funding effects and should be considered by policy makers as a means to trigger policy effectiveness in times of stagnating or decreasing funding volumes.

Working Paper #02.18 now available

By Linus Holtermann and Christian Hundt

The Working Paper #02.18 “Hierarchically structured determinants and phase- related patterns of economic resilience – An empirical case study for European regions” is now online and available here  for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.

Abstract

Our paper seeks to provide empirical evidence for a spatial-temporal system of (short-term) regional resilience determinants. Based on groundwork from Martin (2012) and Martin and Sunley (2015), we employ a nested hierarchy of regional and national determinants to constitute the spatial dimension, while we model the temporal dimension through a resistance and a recovery phase. Utilising hierarchical panel data models for a sample of 22 European countries, we can confirm the presence of a spatial-temporal system as we find significant determinants at both spatial levels that are connected via cross-level interactions and reveal varying, if not opposing directions of influences across the sensitivity and recovery phase.

Working Paper #01.18 now available

By Jonathan Eberle, Thomas Brenner and Timo Mitze.

The Working Paper #01.18 “More publicly funded research, more knowledge spillovers, more economic growth? An empirical analysis for German regions” is now online and available here  for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.

Abstract

This paper deals with the effects of publicly funded research on regional
technological progress and economic growth. We adopt a system approach and
investigate the effects on all regional input factors and output by means of a
flexible spatial panel VAR (SpPVAR) model. This allows us to deal with the
evolutionary nature of regional dynamic processes. We further extend the existing empirical literature on the role of publicly funded research for economic
development by differentiating between public research activities conducted by
universities, technical colleges (Fachhochschulen) and non-university research institutes. The empirical results show that an increase in (public) third-party funds to technical colleges leads to positive effects on regional investment and
employment rates as well as the human capital stock. We also find a
positive link between the publication rate of non-university research institutes and regional investment and employment rates. Furthermore, an overall increase in combined public third-party funding of universities and technical colleges affects regional patent activities, the employment rate and output positively.

Working Paper #03.17 now available

By Jonathan Eberle, Thomas Brenner and Timo Mitze.

The Working Paper #03.17 “A look behind the curtain – Measuring the complex economic effects of regional structural funds in Germany” is now online and available here  for reading and downloading. An overview of all Working Papers yet published in this blog is provided via the button “Working Papers” in the menu above.

Abstract

This paper investigates the mutual impact channels of Germany’s major
regional policy instrument (GRW) on regional economic development.
Different from earlier studies which have predominately focused on a partial assessment of output effects, we explicitly endogenize the factor inputs of the underlying production function.
This allows us to comprehensively assess the role of the GRW in driving per capita output, employment, human and physical capital intensities as well as the
region’s technology level. The results from a spatial panel vector autoregressive model show that GRW funding has significant positive effects on regional output, the employment rate and human capital intensity.