Journal Article

Specialization and risk sharing in European regions

Roberto Basile and Alessandro Girardi

in Journal of Economic Geography

Volume 10, issue 5, pages 645-659
Published in print September 2010 | ISSN: 1468-2702
Published online September 2009 | e-ISSN: 1468-2710 | DOI: https://dx.doi.org/10.1093/jeg/lbp047
Specialization and risk sharing in European regions

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  • Econometric and Statistical Methods and Methodology: General
  • International Trade
  • Macroeconomics: Consumption, Saving, Production, Employment, and Investment
  • Economic Growth and Aggregate Productivity
  • Multiple or Simultaneous Equation Models; Multiple Variables

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Economic theory emphasizes that risk sharing makes it possible to exploit benefits from comparative advantages and economies of scale. Unlike previous studies we test (and reject) the assumption of parameter homogeneity across geographical units in measuring risk sharing. The estimated regional-specific index of risk sharing is then used as a covariate in a model of industrial specialization for the EU15 regions. By estimating a number of nonparametric additive spatial autocovariance models, allowing for nonlinearities and spatial dependence, we show that industrial specialization is positively affected by risk-sharing measures even controlling for other relevant regressors.

Keywords: Risk sharing; specialization; European regions; non-parametric methods; spatial econometrics; E21; F15; O40; C14; C31

Journal Article.  6165 words.  Illustrated.

Subjects: Econometric and Statistical Methods and Methodology: General ; International Trade ; Macroeconomics: Consumption, Saving, Production, Employment, and Investment ; Economic Growth and Aggregate Productivity ; Multiple or Simultaneous Equation Models; Multiple Variables

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