Download Diapositiva 1 - Regionale Economie Groningen

MASST – MAcroeconomic,
Sectoral, Social and
Territorial model
Topics and problems
Andrea Caragliu – Politecnico di Milano
Aims of the project
 The final goal of the project is forecasting future
socio-economic trends for European regions over a
period of 15 years from now.
 However, currently my commitment is to the
estimation stage.
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Research steps
1.
2.
3.
Drawing up of a sound theoretical model and
definition of the appropriate econometric
counterpart;
Estimation of the model;
Forecast of main relationships and definition of
possible scenarios.
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The MASST model - Logic scheme
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Structure of the model
d r  d n  d r n
d r  f (Z n )  f (K r ,T r )
where:
Z = set of national demand variables
K = set of regional structural variables
T = set of regional territorial characteristics
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The starting equation
 I use the following decomposition of regional growth rates:
y r  yn  s
where:
yr = variation in the region’s GDP
yn = variation in the nation’s GDP
s = shift
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Estimated equations
I – National component
1 – GDP variation
Ynt   0  1Ct   2 I t   3Gt   4 X t   5 M t
where α = Parameters to be estimated
ΔC = Consumption growth rate
ΔI = Investment growth rate
ΔG = Public expenditure growth rate
ΔX = Exports growth rate
ΔM = Imports growth rate
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Estimated equations
I – National component
2 – Consumption growth rate
Ct    cYt 1
3 – Public expenditure growth rate
Exogenous
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Estimated equations
I – National component
4. Investment growth rate
I nt  Ynt 1  int 1  ULCnt 1  FDI nt 1
5. Export growth rate
ΔX nt = γ1 ΔULCt 1 + γ2 Ent 1
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Estimated equations
II – Regional component
s = f (human and economic resources; structual and
sectoral characteristics; spatial spillover effects;
integration processes; territorial features)
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New territorial data
Data
Definition
Source of raw data
Agglomerated regions
With a center of > 300.000 inhabitants and a population density >
300 inh./sq. Km. or a population density between 150 and 300 inh.
/sq. Km.
ESPON database
Urban regions
With a center between 150.000 and 300.000 inh. And a population
density of 150-300 inh./sq. Km. (or a smaller pop. density, 100-150
inh./sq. Km. with a bigger centre (> 300.000 inh.) or a population
density between 100 and 150 inh./sq. Km.)
ESPON database
Rural regions
With a population density < 100 inh./sq. Km. and centre > 125.000
inh. or a population density < 100 inh./sq. Km. with a centre <
125.000 inh.
ESPON database
Megas regions
Regions with the location of at least one of the 76 FUAs with the
highest average score in a combined indicator of transport,
population, manufacturing, knowledge, decision-making in the
private sector
ESPON database
Pentagon regions
Regions located within the Pentagon formed by the five European
cities of Milan, Munich, Amsterdam, London, Paris
ESPON database
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New socio-economic data
Data
Definition
Source of raw data
Regional energy consumption by
population
Total energy consumption on population at NUTS 2 in the
year 2002
ESPON database
Net immigration flows (people
between 17 and 27 years)
Average immigration flows of people between 17 and 27
years in the period 1/1/95 - 1/1/00 at NUTS 2 level
ESPON database
Net immigration flows (people
between 32 and 42 years)
Average immigration flows of people between 32 and 42
years in the period 1/1/95 - 1/1/00 at NUTS 2 level
ESPON database
Net immigration flows (people
between 52 and 67 years)
Average immigration flows of people between 52 and 67
years in the period 1/1/95 - 1/1/00 at NUTS 2 level
ESPON database
Regional birth rate
Share of births on population at NUTS 2 level
ESPON database
Regional mortality rate
Share of deaths on population at NUTS 2 level
ESPON database
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Spatial effects indicators
Indicators
Definition
Source of raw data
Spatial spillovers
Sum of the relative annual growth rates of all regions other than region i
divided by the distance between each other region and region i.
Eurostat
Economic potential
Sum of the annual absolute difference between income growth rates of
region j and region i divided by the distance between region i and all
other regions j.
Eurostat
Integration potential
Change in the sum of the annual absolute difference between income
growth rates of regions j and region i divided by the distance between
region i and all other regions j, when in the second term distance is
squared for those regions at the border between Eastern and Western
Countries.
Eurostat
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Traditional economic variables
National variables
Defintions
Sources of the raw data
GDP growth rate
Annual % growth rate of real GDP at NUTS 0 in
the period 1995-2002
Eurostat
Annual change in interest rate
Absolute change in short-term interest rates (3
months) at NUTS 0 in the period 1995-2002
Eurostat
Annual change in unit labour cost
Absolute change in unit labour cost (calculated as
unit salary * number of employees / GDP) at
NUTS 0 in the period 1995-2002
Eurostat
Share of FDI on total internal investments
% Flow of FDI / Gross Fixed Capital Formation at
NUTS 0 in the period 1995-2002
Eurostat
Nominal exchange rate
Nominal effective exchange rate at NUTS 0 in the
period 1995-2002
Eurostat
Inflation rate
Inflation rate at NUTS 0 in the period 1995-2002
Eurostat
Consumption growth
% annual real consumption growth rate at NUTS 0
in the period 1995-2002
Eurostat
Investment growth
% annual real gross fixed capital formation growth
rate at NUTS 0 in the period 1995-2002
Eurostat
Import growth
% annual real import growth at NUTS 0 in the
period 1995-2002
Eurostat
Eastern Countries
All former Eastern Economies
New EU Countries
The 10 new Member Countries who joined the EU
on the 1/5/04
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Population growth rate
Pt 1  0  1 fr  2mr  3im
where
fr = fertility rate - exogenous
mr = mortality rate - exogenous
im = interregional migration  im  0  1u  2 ( we  wr )
where
u = unemployment
we = European average wage
wr = regional average wage
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Database and indicators
 The database is built for 27 Countries (all EU25 countries
plus Bulgaria and Romania) and 259 regions (NUTS2). The
national database is in panel form (1995-2002).
 The database’s originality is due to:
- The use of territorial and socio-economic data at NUTS2
level (so far inexistent), coming from other ESPON projects;
- The use of other spillover indicators created for 259 regions;
- Building up a database which is consistent with Eurostat and
ESPON sources for which missing values were filled and
consistency was checked.
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Results of estimation of shift
parameters
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Open questions 1 - Econometrics
1. As I am estimating spatial spillover effects, most
of the spatial autocorrelation should be already
wiped out. Which kind of spcification test, in the
shape of the Moran’s I, might I use in this case?
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Open questions 1 - Econometrics
2.
The spillover equation can be written as
r
y j
D
i 1
, i  j
i, j
Therefore, I am already using income in the equation. Am I
running into endogeneity of the regressors problem?
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Open questions 1 - Econometrics
3. Regional shift effects do not automatically sum up
to 0 (as we would wish for); instead, given the fact
that the describing equation is filled with positive
explanatory variables, they tend to be distorted
towards positive values. Summing up to 0 is
imposed in the estimation process; is there any
alternative solution?
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Open questions 2 - Economics
1. Calculated shift s, plotted for each year and each
region, is characterized by high variane. That’s why
its average over the period 1999-2002 is chosen.
This choice should be econometrically correct, bu
how do I motivate it from the theoretical point of
view?
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Open questions 2 - Economics
2. Again from the theoretic point of view, why is σ2s
so high?
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Open questions 2 - Economics
3. In the national equations subgroup, consumption
growth rate was described by the following
expression:
Ct    cYt 1
It is in reduced form, which is a technique used in all
the equations. Given its econometrically accetable
use, how do I justify it from the economic
perspective?
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