In this paper, we investigate the use of interactive effect or linear factor models in regional policy evaluation. We contrast treatment effect estimates obtained by Bai (2009)'s least squares method with the popular difference in difference estimates as well as with estimates obtained using...

An analytically solvable model of new economic geography is developed. Acquisition of skills is costly for workers but it allows them to earn wages that are larger than those of the unskilled. Moreover, skills acquisition can be subsidized by a regional government. For large transport costs,...

Tax competition for a mobile factor is different in 'new economic geography settings' compared to standard tax competition models. The agglomeration rent which accrues to the mobile factor in the core region can be taxed. Moreover, a tax differential between the core and the periphery can be...

We study the impact of local economic structure on employment dynamics. Local employment is decomposed into the product of the average plant size and the number of plants in the area and industry. We estimate the dynamics of both components simultaneously using French yearly data on 36...

This paper aims to test several hypotheses on the determinants of the quality of trade in cross-country regressions, taking a sample of trade competitors in EU markets. The hypotheses are those underlying two models of VIIT: the so-called neo-H-O model based on factor endowment and an ?economic...

This paper studies the social desirability of agglomeration and the efficiency arguments for policy intervention in a simple, analytically solvable ?new economic geography? model with two trade integrating regions. The location pattern emerging as market equilibrium is ?bubbleshaped?, i.e. it...

This paper presents a simple, analytically solvable Chamberlinian agglomeration model. As in the canonical core-periphery (CP) model, two agglomerative forces are at work. However, the present model exhibits a 'pitchfork bifurcation' rather than the 'tomahawk bifurcation' of the CP model.