Roberto Basile, Luisa Giallonardo, Alessandro Girardi, Daniele Mantegazzi (p)

Flavio Vieira

This paper contributes to the empirical literature on the relationship between ‘urbanization economies’ and access to bank credit. In particular, we further exploit the linkages between urbanization economies and access to credit by focusing on two specific channels through which the impact of urbanization economies percolates. The first channel is related to the “portfolio effect” of greater industrial diversification, typical of higher urbanized areas. The second channel is related to a more “qualified” concept of diversity, corresponding to the notion of economic complexity (ECI). Using a panel of Italian provincial data from 2008 to 2018, we consider the impact of industrial diversity and economic complexity on a credit crunch indicator for the manufacturing sector. We first use maximum likelihood methods to estimate spatial dynamic models which account for time persistence and weak cross-dependence and provide evidence for both temporal persistence and lagged (but not contemporaneous) spatial autocorrelation. Moreover, we also provide estimation results based on an application of (spatial) dynamic common correlation effects techniques, which simultaneously account for both cross-sectional dependence and endogeneity biases. The estimation results provide robust evidence of a negative effect of economic complexity on the credit crunch. The estimation results also reveal the relevance of long-run spatial spillover effects of economic complexity on the credit crunch.

Evangelos Rasvanis (p), Dimitris Kallioras, Maria Tsiapa, George Petrakos, Panayiotis Manetos, Lefteris Topaloglou, Maria Adamakou

Daniele Mantegazzi

In the European Union (EU), the completely free movement of capital between its member-states is legislated. The only exemptions for capital movements (i.e. capital controls) accepted by the European Union's institutions were those of Cyprus in 2013 and Greece in 2015, due to the destabilization of their economies and the risk of absconding to other countries large volumes of capital and investment. In this context, there have been considerable flows of Foreign Direct Investments between EU regions and countries in recent decades. But which flows are greater, those between regions within the borders of the EU member-states or those between regions outside national borders in the 21st century?
Using aggregated firm-level data for the period 2010–2018, derived from Amadeus database, which present the regional flows of Direct Investments inside and outside the borders of EU member-states, the aim of this paper is to highlight the importance of the border as a means of holding capital within a country or as something which is now obsolete in economic unions, such as the EU. The paper utilizes sophisticated descriptive statistical analysis and visualization techniques. The main findings of the paper point out that flows of Direct Investments between regions within national borders (Domestic Direct Investments) are still exceptionally large and in the majority of the EU countries larger than Direct Investment flows outside national borders (Foreign Direct Investments) and therefore that national borders still matter.

Flavio Vieira (p), Cleomar Gomes da Silva

Evangelos Rasvanis

This article aims to investigate the behavior of exchange rate in the BRICS countries, with an emphasis on exchange rate passthrough and exchange rate determination empirical models. By applying the ARDL Bounds Testing Approach Methodology, from January 2005 to December 2019. Our main results show that: i) there is a long run cointegration between the variables analyzed for all estimated models; ii) there is a very slow speed of adjustment towards the long run equilibrium; iii) there is evidence of exchange rate passthrough to inflation mainly in the long run, but not as strong as before; iv) there is no evidence of exchange rate overshooting; v) international reserve accumulation can be considered a partial explanation for the evidence of no exchange rate overshooting.