Michiel N. Daams (p), Philip McCann, Paolo Veneri, Richard Barkham

Javier Barbero

Since the global financial crisis, processes of divergence have given rise to a major divide between wealthy and less prosperous cities. In this context, the present paper’s aim is to uncover the role which capital shocks and investment allocation processes play in shaping local and regional productivity responses. The underlying approach is based on the integration and analysis of real estate capital inflows across Europe. The importance of real estate capital flows is that they represent substantial and long-term investments which bundle together the capital from many different stakeholders and institutions. Importantly, these investments act as a signal of broader capital market conditions across sectors and localities. Our analysis exploits the vast heterogeneity of Europe to identify how capital pricing responds to national, regional, or city-specific features when exposed to severe and prolonged shocks. We analyze uniquely detailed data on investment-grade real estate deals (N = 60,000) prior and after the 2007-08 crisis and enrich these with OECD-standardized data. Whereas prior to the crisis the differences between places are largely priced in, with the serious uncertainty of the post-crisis period the pricing of capital diverges between weaker and stronger locales, which offers a possible explanation for their persistent divide in growth since.

Gerson Javier Perez Valbuena (p), Alejandro Ome

Michiel N. Daams

Analyzing the impact of price-driven mineral windfalls on human capital requires disentangling multiple potential causal channels. In this paper we study the impact of royalties in areas that are not necessarily mineral- or oil-producing areas. We do this by analyzing a reform enacted in Colombia in 2012 that modified how oil- and mineral- royalty revenue was distributed in the country. Since 1991 such royalties were assigned mostly to territories where the resources were exploited. The 2012 reform turned the system into one where most non-producing municipalities saw their revenues increased. The purpose of this study is to analyze whether this reform had an impact on educational outcomes.
We use a difference-in-differences approach for this analysis. While the amount of royalties that each municipality receives is endogenous to multiple factors, the maximum amount they can receive is determined exogenously by the rules of the 2012 reform and the international price of oil. We use these rules and the variation in the price of oil as instruments for the value of resources municipalities receive as total royalties in a difference-in-differences framework with a continuous treatment in order to estimate their impact on educational indicators.
We found positive impacts on enrollment in primary, secondary, and high schools, but no conclusive evidence on academic achievement at these levels. We hypothesize that the lack of impacts on achievement could be explained by the fact that royalties are increasing enrollment and therefore changing the background composition of students who survive secondary and high school.

Vincent Boitier (p)

Gerson Javier Perez Valbuena

It is well known that the standard system of cities suffers from two major drawbacks. A spatial equilibrium i)- is not unique and ii)- cannot reproduce the basic fact that big cities follow an exact Zipf's law under credible conditions. To fix this long-lasting puzzle, I build a new theory of systems of cities that generates three key results. First, the standard indirect utility function \`a la Henderson is obtained using hyperbolic preferences. Second, a Zipf's law can hold in the model, depending on the value of TFP parameters. Third, a unique spatial equilibrium can be obtained, depending on the value of agricultural rents.

Javier Barbero (p), Ernesto Rodríguez-Crespo, Anabela M. Santos

Vincent Boitier

The twin green and digital transition is at the heart of the European Union post-pandemic recovery and represents a key element of the new growth strategy.

The present paper aims to contribute to the existing literature by understanding the geographical location and concentration patterns of ERDF (European Regional Development Fund) projects associated with green and digital investments. The analysis takes advantage of a novel and unique dataset (Bachtrögler et al., 2021), which includes around 600,000 observations that identify regional green and digital financing patterns for ERDF project beneficiaries within the EU27 over the 2014-2020 period. To the best of our knowledge, this is the first study that benefits from the information surfacing in this database.

Using a novel dataset of projects covering 238 regions of the 27 EU countries, together with a funding scheme for the period 2014-2020, a glimpse of our results shows the following findings. First, ERDF green and green-digital projects follow a similar spatial pattern, since they tend to be concentrated in the most polluting regions and associated to network collaboration in these areas. Both the qualification of human resources and the quality of governance in a region seem to be more relevant when explaining the location of digital technologies projects than for green (green-digital) projects.