Quotation Fingleton, Bernard, Fischer, Manfred M. 2010. Neoclassical theory versus New Economic Geography. Competing explanations of cross-regional variation in economic development. Annals of Regional Science 44 (3), 467-491.


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Abstract

This paper tests whether the success of new economic geography (NEG) and its wage equation is replicated using data for NUTS-2 regions in Europe, under the challenge of a competing neoclassical growth model and the need to control for additional effects. Testing is accomplished by fitting both rival models and by setting up a composite spatial panel model within which rivals are nested, using a panel of 255 European regions over the time period 1995-2003. While both competing models individually provide good explanations of the data, only the NEG model retains explanatory power in the presence of region-specific fixed effects and it is dominant within the composite model. In addition, the NEG model parameter estimates correspond to theoretical expectation, whereas the parameter estimates from the Solow model are counterintuitive. However estimation of the NEG model is problematical because of endogeneity and measurement error.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Annals of Regional Science
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new VW-D
Language English
Title Neoclassical theory versus New Economic Geography. Competing explanations of cross-regional variation in economic development
Volume 44
Number 3
Year 2010
Page from 467
Page to 491
Reviewed? Y
DOI 10.1007/s00168-008-0278-z

Associations

Projects
Regional Income Growth and Club-Convergence in Europe - Insights From a Spatial Econometric Perspective
People
Fischer, Manfred M. (Details)
External
Fingleton, Bernard (University of Strathclyde, United Kingdom)
Organization
Research Institute for Supply Chain Management FI (Details)
Institute for Economic Geography and GIScience IN (Details)
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