Miguel Manjon (p), Oscar Martinez , Karen Miranda

We present a growth model with interdependencies in the heterogeneous technological progress, physical capital and stock of knowledge that yields a growth-initial equation that can be taken to the data. We then use data on EU-NUTS2 regions and a correlated random effects specification to estimate the resulting spatial Durbin dynamic panel model with spatially weighted individual effects. QML estimates support our model against simpler alternatives that impose a homogeneous technology and limit the sources of spatial externalities. Likewise, our results indicate that rich regions tend to have higher ``unobserved productivity" and are likely to stay rich because of the strong time and spatial dependence of the GDP per capita. Poor regions, on the other hand, tend to enjoy ``unobserved productivity" spillovers but are likely to stay poor
unless they increase their saving rates.

Paola Annoni (p), Laura de Dominicis , Neysan Khabirpour

The aim of this study is to empirically examine regional resilience by assessing economic growth patterns in two distinct groups of regions across the European Union (EU) in the aftermath of the 2008 economic and financial crisis. In an effort to consider the regions as interconnected economic areas and account for spillover effects, the modelling approach incorporates complex spatial effects that consider both spatial heterogeneity and spatial dependence. The analysis follows a step-wise approach. First, spatial heterogeneity in the EU is assessed by employing Exploratory Spatial Data Analysis (ESDA), which identifies two distinct spatial regimes on the basis of their regional GDP per capita in 2008. The two regimes clearly divide the EU territory into a north-west core, of relatively high income regions, and a south-east periphery, of lower income regions. Next, a Spatial Durbin Model is employed to estimate the determinants of regional resilience and growth in both spatial regimes and sheds light on any potential spillover effects. Complementing more traditional factors of growth, this study employs components of the Regional Competitiveness Index (RCI) to explain growth differentials across EU regions. Empirical results indicate that while both spatial regimes experience processes of economic convergence, recent determinants of growth, as well as spillover dynamics, differ across the two. In the core regime, better institutions, higher shares of investment, and an economy specialized in higher value-added sectors significantly spur domestic growth, with investment also inducing positive spillover effects to neighbouring regions. In the peripheral regime, low shares of lower-secondary educational attainment and high shares of tertiary educational attainment have a significant positive effect on domestic growth, with higher shares of tertiary educational attainment also inducing positive spillover effects. Moreover, technological readiness is also identified as an important factor in the peripheral regime with positive spillover effects. Upon the bedrock of these findings, initial policy proposals are offered.

Athanasios Ziogas (p), Dimitris Ballas, Arjen Edzes, Sierdjan Koster

This paper seeks to examine the spatial distribution of individuals as a factor in explaining happiness and well-being levels. There have long been attempts and different approaches in the literature to date regarding the measurement of happiness and the most important factors that seem to contribute to it. The shift from the determinants of happiness towards analyzing levels of happiness through years and a multilevel approach was developed in order to determine the relative importance of the area (district, region). Yet, there is a relative scarcity of studies of the interdependencies of happiness in space and place. Few studies that explicitly analyze the concept of interdependencies are confined at the intra-family level. In this paper we will try to fill this gap in the literature and adding a new geographical dimension by taking into account the arrangement of spatial units (individuals) in our samples and exploring the degree to which geography matters when it comes to happiness. This paper argues that the distance separating different sets of individuals play a crucial role regarding the spatial spillovers of happiness. A key contribution of this paper will be the examination of the spatial spillover effects, e.g. to what extent one’s levels of happiness depend on the levels of happiness of her or his neighbours as well as on the latter’s employment status and health condition. Anonymized survey data will be used that measure the subjective well-being of individuals while taking into account their spatial distribution. Suitable spatial econometric techniques will be employed to analyze spatial spillover effects, both direct and indirect, and taking into account the (weak or strong) spatial dependence between the neighbourhoods-regions. Being able to identify spatial interdependencies with regards to happiness will provide policy makers a new understanding regarding the policies that will implement. If those interdependencies are valid, there will be spillovers of happiness or unhappiness from one spatial unit to another prompting social planners to be more cautious when drawing policies. Thus, apart from the increasing need to regional specific policies, the latter should be carefully drawn because of the neighbourhood effect and social interactions. From a scientific perspective, this paper will also add a geographical dimension on the determinants of happiness.

Amanda Ross (p), John Deskins , Donald Lacombe

We examine the spatial relationship between state tax policy and small business growth. There is an existing literature that examines spatial competition with regards to tax and welfare policies, arguing that state and local governments set fiscal policies inefficiently. On the other hand, there is a literature on agglomeration economies, which would suggest that if taxes decrease business activity in general, there may
be negative effects both within a jurisdiction and in nearby areas. Drawing upon spatial econometric methods, we examine how differences in state tax policy affect small business growth. Spatial methods allow us to estimate the direct effects of the policy, as well as any spillover effects of policies in adjacent states. We find that there are important direct and indirect effects of state tax policy on small business
activity. Our results indicate that local policy makers need to be aware of tax policy in neighboring jurisdictions as this affects growth within their boundaries.