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Growth, technological interdependence and spatial externalities: theory and evidence
Author(s) -
Ertur Cem,
Koch Wilfried
Publication year - 2007
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.963
Subject(s) - externality , spillover effect , economics , spatial econometrics , convergence (economics) , econometrics , autoregressive model , conditional convergence , sample (material) , spatial dependence , spatial analysis , econometric model , microeconomics , macroeconomics , mathematics , statistics , chemistry , chromatography
This paper presents a theoretical growth model which explicitly takes into account technological interdependence among economies and examines the impact of spillover effects. Technological interdependence is assumed to operate through spatial externalities. The magnitude of the physical capital externalities at steady state, which is not usually identified in the literature, is estimated using a spatial econometric specification. Spatial externalities are found to be significant. This spatially augmented Solow model yields a conditional convergence equation which is characterized by parameter heterogeneity. A locally linear spatial autoregressive specification is then estimated providing a convergence speed estimate for each country of the sample. Copyright © 2007 John Wiley & Sons, Ltd.