Murat Genc (p)

Peter Batey

Applied research in economics contains many papers that empirically estimate an elasticity (or a set of elasticities) and uses the estimate(s) for policy analyses. These estimates are typically based on an estimated relationship (such as a demand function). If the specific functional form used in the estimation yields a constant elasticity in the form of an estimated coefficient alone, that coefficient represents the
elasticity. If, on the other hand, the formula for the elasticity involves other regressors and coefficients, empirical estimation of the elasticity is based on applying the calculus-based definition of elasticity to this expression. However, a differential change in a variable is only an approximation to the actual discrete change for small changes, and the approximation can may be quite poor when large changes are considered. This paper advocates using the actual percentage change in the
predicted value of the dependent variable when the variable with respect to which the elasticity is estimated changes by one percent. The example provided shows that the difference can be substantial when elasticities are estimated this way.

Wade Litt (p)

Murat Genc

This project explores the potential applications of large language models (LLMs) in regional science research. I review existing nascent literature on the use of LLMs in the fields associated with regional science and identify current challenges and opportunities for the utilization of language models in regional science. The project will then explore the potential applications of LLMs for addressing challenges in regional science research, how they can help develop and test new and existing questions within the field, and the accuracy of their output relating to regional economies. Finally, the project will discuss the implications of these findings for regional science research and suggest possible directions for future research.

Daniel Aparicio Perez (p), Jordi Ripollés

Wade Litt

The role of natural resource endowments in development has been extensively studied. Early
researches have traditionally emphasized the great benefits that natural resources brought to
nations in the middle of the industrial revolution (e.g., Wrigley, 1990, Cambridge University
Press). However, after WWII, an increasing number of works began to mount evidence
against this belief: resource-rich countries grew, on average, more slowly than resource-poor
countries (e.g., Cabrales and Hauk, 2011; The Economic Journal). This last phenomenon was
seminally coined by Sachs and Warner (2001, European Economic Review) as the ”resource
curse hypothesis”. Nowadays, we can benefit from a wide range of empirical studies, aimed at
disentangling the puzzle. However, the channels through which natural resource abundance can
operate in a country’s economic development are complex and multifaceted. On the negative
side, a natural resources windfall may boost rent-seeking behavior (Torvik, 2002, Journal of
Development Economics) which can lead to a misallocation of resources, corruption, and political
instability. Additionally, the abundance of natural resources can trigger the Dutch Disease, a
phenomenon where the appreciation of the exchange rate could reduce the competitiveness in
other export-oriented sectors of the economy (Corden and Neary’s, 1982, The Economic Journal).
On the positive side, good institutions can mitigate the negative effects of the resource curse by
ensuring that resources are managed sustainably and equitably (Acemoglu, et al., 2003, Princeton
and Oxford: Princeton University Press). Despite the academic efforts, little consensus exists on
whether natural resources boost or hinder economic development of nations. Indeed, according
to the recent meta-analysis conducted by Havranek et al. (2016, World Development), which is
based on 43 econometric studies, approximately the 40 % of the empirical studies support the
”resource curse hypothesis”, the 20 % finds the opposite, and a 40 % does not find a significant
relationship between natural resources and economic development. To shed further light on the
issue, in this paper we try to go one step further by modeling the unobserved heterogeneity
that may underlie these ambiguous findings. To achieve this, we employ the grouped fixed
effect estimator of Bonhomme and Manresa (2015, Econometrica) to empirically explore the
relationship between economic development and natural resources, accommodating clustered
time-varying patterns of unobserved heterogeneity within groups of countries. This methodology
will allow us estimate group-specific time patterns and country group membership directly from
the data. By understanding these group-level trends, we can gain deeper insights into this
complex issue.

Peter Batey (p), Malachy Buck

Daniel Aparicio Perez

Throughout much of the last forty years, poverty and disadvantage have intensified geographically in British cities. The response from Government has been to develop and implement urban policy aimed at regenerating those areas most badly affected. Much of the focus has been on neighbourhoods within inner-city areas and on a range of place-, and people-based policy initiatives. A growing body of applied research has been carried out aimed at assessing the impacts of these initiatives, in the hope of establishing ‘what works?’ and therefore informing subsequent policy interventions
As part of this research, much attention has been paid to questions about the complex relationships between migration, urban deprivation, social mobility, the housing market and neighbourhood change. This work has been aided by the increasing availability of small area statistics, notably from the decennial Population Census. The 2001 Census in particular opened up the possibility of linking migration data to area typologies defined by the use of census-based geodemographic classifications. Sadly this proved to be a one-off. The migration flows from the 2011 and 2021 Censuses are not available in the same level of detail, ostensibly for reasons of confidentiality.
The focus in this paper is on exploring the detailed relationship between migration and neighbourhood change, with particular reference to the region of Merseyside in north-west England which has been the subject of numerous urban policy interventions in response to long-standing severe social and economic problems. The example of the Pathways area-based policy initiative is explored.
The paper analyses the migration flows into and out of different neighbourhood types in the UK as a whole, identifying flows that are greater than, or less than, expected. From this, there emerges a clear picture of the structure of migration flows. Migration flows are examined between geodemographic area types.
A matched comparison method is then used to compare Pathways and Pathways-like areas sharing very similar social and economic characteristics to Pathways Areas but without the same designation and targeted resources. An assessment is made of whether this community development component of Merseyside's Objective One programme, and the resources this brought, made a positive impact upon the population of the Merseyside region's most deprived areas. It covers the period of the first phase of Objective One funding, from 1994 to 1999.