Intensity Of Spillovers Research Articles

Human capital externalities in cities: evidence from Chinese manufacturing firms

We investigate whether increased geographic concentration of human capital generates positive externalities that benefit firms located in the area. Using a panel of Chinese manufacturing firms, we find a positive and statistically significant relationship between firm productivity and city-level human capital. This result is robust to alternative model specifications and estimation methods used and distinguishable from the effect of industry agglomeration and the spillover effect associated with foreign direct investment. We argue that human capital spillovers do not occur automatically and freely. The intensity of spillovers depends on the benefits and costs accrued to individual workers, which in turn depend on the growth, technological and institutional environments in which the firm operates. We find that the intensity of spillovers is greater in industries where human capital matters more, in larger or more densely populated cities and in more economically vibrant coastal cities. We also find that the intensity of spillovers is generally greater for non-state-owned firms than for state-owned ones and displays an upward trend, which is suggestive of an intensifying impact of market-oriented reforms on human capital externalities.

The Impact of Regional R&D Subsidy in a Computable General Equilibrium Model

This article presents a computable general equilibrium model for the region of Sardinia (Italy) with the purpose of investigating the macroeconomic impact of research and development (R&D) policies. The model incorporates induced technical change obtained through knowledge accumulation and external knowledge spillovers. It turns out that the cost of R&D policies may change according to wage setting in the region. Indeed, the likely size of the optimal subsidy that is required to reach a given target growth is lower when wages are bargained locally compared to the case where wages are bargained nationally. Furthermore, the capacity of such a policy to generate knowledge spillovers from international and interregional trade is quite modest. Indeed, the capacity of the regional system to internalize innovations embedded in imported goods is partially offset by an increase in internal efficiency that lowers the spillover intensity through a reduction in the share of imports.

MECHANISMS AND PUBLIC ADMINISTRATION REFORM: ITALIAN CASES OF BETTER REGULATION AND DIGITALIZATION

This article applies a processual approach to the explanation of administrative reform in Italy over fifteen years. By carrying out a comparison between better regulation and digitalization policies it shows that the oscillation in the level of implementation over time and across policies can be explained by the intensity and direction of spillover and certification mechanisms and that in turn these mechanisms are activated by design features and contextual factors at different levels of analysis.

The Role of Volatility Regimes on Volatility Transmission Patterns

This paper investigates volatility transmission patterns between the US and Eurozone stock markets differentiating between low and high volatility periods which tend to be related with international crisis. Our approach let us distinguish the spillover intensities between markets in calm and crisis periods and also tests for a potential increase of market comovements during these last periods. State-Dependent Volatility Impulse-Response Functions (SD-VIRF) are also introduced considering different responses of stock markets during detected periods of high and low volatilities. The results show that volatility spillovers intensities increase during turmoil periods and it is also find an increase of conditional correlation during times of market jitters.

Localized knowledge spillovers and skill‐biased performance

AbstractThis article focuses on a relatively unappreciated consequence of localized knowledge spillovers: their implications for productivity across skills. Spillovers benefit skilled workers more than unskilled ones, weaken complementarity between them, and widen their productivity gap. To test this theory, the authors use data from 146 U.S. cities and find that cities with a greater intensity of localized knowledge spillovers exhibit a bigger productivity gap across skills, after controlling for the endogeneity of knowledge spillovers, interindustry differences, and other factors. These results imply that in the long run, economies characterized by localized knowledge spillovers encourage investments in education and attract skilled people, raising the relative share of the skilled population. When complementarity across skills weakens, this analysis also offers a framework to link localized knowledge spillovers to the formation of entrepreneurial skill‐intensive firms. Copyright © 2010 Strategic Management Society.

Quality heterogeneity and global economic growth

This paper develops a fully endogenous, variety-expansion growth model with firm-specific quality heterogeneity, limit pricing, and an endogenous distribution of markups. Firms with high-quality products engage in exporting, firms with intermediate-quality products serve the domestic market, and inefficient firms with low-quality products exit the market. Trade liberalization, measured by a reduction in trade costs or a decline in foreign market entry costs, generates a reallocation of resources from low-quality to high-quality products and exit of inefficient firms. However, it has ambiguous effects on the average global quality level, long-run growth, and welfare. An increase in the rate of population growth or in the intensity of trade-related knowledge spillovers accelerates economic growth. The laissez-faire equilibrium is inefficient, and this leaves room for welfare-improving government intervention.

Volatility transmission: what do Asia‐Pacific markets expect?

PurposeThe purpose of this paper is to investigate the international information transmission of return and volatility spillovers from US and Japan markets to Asia‐Pacific markets using daily stock market return data covering the period (1991‐2004).Design/methodology/approachThis paper considers a volatility spillover model by applying a bivariate Baba, Engle, Kraft and Kroner‐Generalized Autoregressive Conditional Heteroskedastic model, for each of the Asia‐Pacific countries against the Japan and the USA using daily returns for the period (1991‐2004). Splitting the sample into two non‐overlapping sub‐samples, the paper investigates whether the efforts for more economic, monetary and financial integration have fundamentally altered the sources and intensity of volatility spillovers to the individual stock market.FindingsIn the majority of the markets under scrutiny, we provide evidence of direct volatility spillovers, running mainly from the Japanese and US markets and pointing to more rapid information transmission during the recent years. First, the volatility of the Asia‐Pacific markets is becoming influenced more by the US market for the recent years. Second, for international investors to get profits from the returns of Asia‐Pacific securities, it is necessary to pay attention to the US market directly. Third, Korea, Singapore and Hong Kong are among the most Asia‐Pacific markets vulnerable to shocks from US investors due to the large ratio of portfolio holding. However, implementing global hedging strategies on Asia‐Pacific markets requires the information concerning the Japanese volatility behaviour.Originality/valueThis paper should be of interest to a broad practitioners and academics including those interested in modelling volatility for financial market risk management.

Bounding The Effects of R&D An Investigation Using Matched Establishment-Firm Data

Studies of firm-level data have shown that a firm's RD (2) productivity appears to depend on the intensity of parent firm RD and (3) spillovers of research effects from technologically related firms are significant but also depend on R&D intensity rather than total industry R&D. These results suggest that, despite the externalities created by spillovers of R&D, the dilution of R&D across multiple target plants reduces its potency sufficiently that spillovers may not be a source of industry-wide or economy-wide increasing returns.

LOCALIZED KNOWLEDGE SPILLOVERS AND WAGE DIFFERENCES.

The article discusses a theory on the relationship between the intensity of localized knowledge spillovers and the inequality of wages between skilled and unskilled individuals. Data from 146 U.S. cities were examined to support the theory that the more intense localized knowledge spillovers reduce the complementarity between the skilled and unskilled, resulting in increased inequality in their wages and productivity. It was found that more open cultures can generate higher wage inequality between skills. The importance of cultural change in fostering the interchange of information is also discussed.

Correlated Risk and Volatility Spillovers across U.S. Regional Housing Markets

This paper models the correlated shocks across regional housing markets and the spillover effects in time-varying housing price volatilities. We explore two kinds of diffusion channels: geographic closeness and economic similarity. Our empirical investigation is based on the Case-Shiller housing price indices from 2000 to 2008 for the twenty major U.S. housing markets. The results demonstrate that extra volatility can be caused by shocks in other regions. In particular, we find significant contagion effects during the 2007-2008 subprime crisis and the subsequent financial crisis. We define contagion as structural changes in spatial volatility spillover intensities. Both channels play important roles in risk spreading, but the weight of the economic channel is greater during times of market stress than during normal market conditions. This indicates that shocks have a greater tendency to spread nationwide between economic similar regions during market downturns.

Quality Heterogeneity and Global Economic Growth

This paper develops a fully-endogenous, variety-expansion growth model with firm-specific quality heterogeneity, limit pricing, and an endogenous distribution of markups. Trade induces only firms with high-quality products to export, whereas firms with low-quality products serve only the domestic market. Trade liberalization, measured by a reduction in trade costs or a reduction in foreign-market entry costs, shifts resources from low-quality to high-quality products and intensifies the product market competition. However, it has ambiguous effects on the average markup, long-run growth, and welfare. An increase in the rate of population growth or in the intensity of international knowledge spillovers accelerates economic growth. The laissez-faire equilibrium is inefficient, and this leaves room for welfare-improving government intervention.

R&D Spending and Knowledge Spillovers

Understanding firm constraints in R&D expenditures is a key component to addressing broader economic goals. We investigate the role of local intensity of university-industry knowledge spillovers on the amount of firm R&D expenditure. To investigate this issue we use firm-level dataon R&D expenditures from Italy. We find that geographical variation in the R&D intensity of higher education sector, which is shown to be a good proxy for the local intensity of knowledge spillovers, plays an important role for the amount of R&D expenditures financed by the local business sector. We argue that our findings have important policy implications.

Measuring impacts of academic science on industrial research: A citation-based approach

This paper introduces a citation-based metholodology to characterize and measure the magnitude and intensity of knowledge flows and knowledge spillovers from the public research sector to basic and strategic research in the private sector. We present results derived from an interrelated series of statistical analyses based on Private-to-Public Citations (PrPuCs) within reference lists of the research articles produced by industrial researchers during the years 1996-2003. The first part of the results provides an overview of PrPuC statistics worldwide for OECD countries. Overall, 70% to 80% of those references within corporate research papers relate to papers produced by public research organizations. When controlling for the size of their public sector research bases, Switzerland and the United States appear to be the major suppliers of 'citable' scientific knowledge for industrial research - the value of their Corporate Citation Intensity (CCI) exceeds their statistically expected value by more than 25%. A country's CCI performance turns out to be closely related to the citation impact of the entire domestic science base. The second section deals with an exploratory case study devoted to Electrical Engineering and Telecommunications, one of the corporate sector's major research areas. The findings include a list of the major citing and cited sources at the level of countries and organizations, as well as an analysis of PrPuCs as a “missing link”connection intra-science citations and citations received from corporate science-based patents.

Getting on or getting by?

Recent speculation about the impact on family life of contemporary patterns of work has prompted considerable and concerted social research activity in which the workplace and household have figured prominently. This article extends these studies to examine employment in prototypical new sectors of the economy, namely call centres and software, which at the time of the study were enjoying spectacular growth. Employees in both sectors reported spillover from work to home, though the extent, nature and intensity of spillover varied significantly between the sectors. The study identified the different and hitherto unexplored ways in which employees in these different sectors attempt to cope with complex articulations between home and work, and the varying resources which they bring to bear in doing so. Contemporary work settings indicate little change from more established sectors in that gender, status and labour market strength are important factors in offering work boundary discretion.

Can Investor Sentiment Be a Channel of Contagion During the 1997 Asian Crisis? Evidence from Closed-End Country Funds

This paper tests whether changes in investor sentiment can be a channel of contagion during the 1997 Asian crisis using data from US based closed-end country funds (CECFs) and the corresponding net asset values (NAVs). Specifically, I examine whether there are any incremental conditional mean and asymmetric volatility spillovers between domestic NAV and overseas CECF markets during the crisis after controlling for the shocks from economic fundamentals. The empirical results based on the tests of international CAPM in the absence purchasing power parity with multivariate GARCH-in-mean approach show that before the crisis local NAV investor sentiment is more important than US market sentiment in determining CECF returns, while US market sentiment is more important than CECF investor sentiment in determining NAV returns. During the crisis, the intensity of mean spillover from NAV to CECF has decreased, but it has increased significantly for the mean spillover from CECF to NAV, suggesting that the changes in foreign investor sentiment in particular the sentiment from US CECF investors played the major role in determining local NAV returns and therefore can be the potential cause of the 1997 Asian crisis. After the crisis, both the mean spillovers from NAV to CECF and from CECF to NAV have shifted back to their pre-crisis levels, but the mean spillovers from both US and foreign exchange markets have become more important for CECFs. Finally, there is a unidirectional relationship of asymmetric volatility shocks between CECF and its NAV where the direction of the shocks runs from NAV to CECF, and this relationship strengthens during the crisis. This finding implies that the trading behavior of local NAV investors is the major source of asymmetric volatility shocks to the corresponding CECF traded in the US, and the impact of these shocks increases significantly during the crisis.

Modeling Regional Externalities with Heterogeneous Incentives and Fixed Boundaries: Applications to Foot and Mouth Disease Control in South America*

F or over a century, the countries of South America's Southern Cone1 have struggled to control or eradicate foot and mouth disease (FMD). These efforts have been undermined by a pronounced spatial spillover of the FMD virus. Because the virus spreads readily, the effectiveness of control efforts in one country, or on one ranch, is influenced by control efforts in nearby countries or ranches. These spatial effects are compounded by variations in incentives to control the disease and diverse sensitivities to neighbors. This paper demonstrates how control behavior is affected by spatial spillovers of varied intensity and by heterogeneous incentives to control disease. The decision to control disease is framed as a spatial game in which the behavior of neighbors influences the payoffs to individuals from control effort. Because trade, geographic, and policy factors can leave some individuals more susceptible to their neighbors' actions than others, we impose hard boundaries that constrain disease spread and modulate the intensity of spillovers. Divergent incentives to control disease are modeled by fixing some individuals in specific

Volatility Spillover Effects in European Equity Markets

AbstractThis paper investigates to what extent globalization and regional integration lead to increasing equity market interdependence. I focus on Western Europe, as this region has gone through a unique period of economic, financial, and monetary integration. More specifically, I quantify the magnitude and time-varying nature of volatility spillovers from the aggregate European (EU) and U.S. market to 13 local European equity markets. To account for time-varying integration, I use a regime-switching model to allow the shock sensitivities to change over time. I find regime switches to be both statistically and economically important. Both the EU and U.S. shock spillover intensity increased substantially over the 1980s and 1990s, though the rise is more pronounced for EU spillovers. Shock spillover intensities increased most strongly in the second half of the 1980s and the first half of the 1990s. I show that increased trade integration, equity market development, and low inflation contribute to the increase in EU shock spillover intensity. I also find evidence for contagion from the U.S. market to a number of local European equity markets during periods of high world market volatility.

Innovation Strategies in a Competitive Dynamic Setting

The paper present a dynamic extension to the static asymmetric model of the competitive R&D and production duopoly subject to knowledge spillovers. Two asymmetric firms are assumed to build their competitive/cooperative strategies in the situation when they operate for a limited period of time and dispose their knowledge capital in the end. Solutions are derived from the linear-quadratic dynamic games. This study concludes that two agents conduct their R&D and production asymmetrically. Agents prefer the R&D-cooperative strategy over the competitive one regardless the intensity of knowledge spillovers. The preferences of the social planner depend on the intensity of such spillovers. Regulator prefers the competitive behavior when spillovers are weak, and R&D-cooperation when knowledge spillovers are strong.

A study on temporal and regional process of knowledge spillover

The temporal and regional process of knowledge spillover that has a distinct geographical performance is an important process proposed by the theory of new economic growth. Based on two case studies on the keywords of sustainable development and knowledge economy, it is found that it is improper for traditional theories to estimate the spillover intensity only by knowledge gaps. Three important findings have been discovered on the basis of the case studies. Firstly, not only is knowledge spillover related to knowledge gaps, but also the regional demands determined by geographical characteristics. Secondly, similar to many economic geographical phenomena, the space of spillover intensity is exponentially decreasing. Thirdly, knowledge driven by regional demands is active rather than the ramification of trading. Finally, a new model describing the spillover intensity between regions has been proposed in this paper.

Technology spillover and regional convergence process: a statistical analysis of the Italian case

Recent literature broadly highlight the importance of modelling technological innovation effects on economic growth. This paper develops a methodology that allows to measure technology contribution to economic convergence; the choice of a regional framework also allows to underline interregional knowledge transmission as a the major channel of technological progress. Moreover, the specification of a dynamic growth model enables to evaluate both the regional convergence and the effect of innovation on long-run labour productivity without resorting to any technology index measurement. We contribute to the methodological literature also by comparing different dynamic panel data estimation procedures and by detecting both the presence of small sample bias and the existence of a nearly unit root autoregressive process in labour productivity series. The results of an empirical analysis on Italian regions show how most of innovation resources derives from relevant spillover mechanisms. Furthermore, technology spillover intensity seems to be strongly affected by geography and productive structure of regions.