Christoph Hauser (p), Gottfried Tappeiner, Janette Walde

André Luis S Chagas

Social trust is increasingly seen as an important determinant of economic growth and social prosperity in regions and nations. Even in a comparatively homogeneous area such as Europe, there are stark sub-national differences in levels of generalized trust. It is thus of crucial importance to identify the driving forces of regional trust and analyze the dynamics of its formation. The present paper considers these issues based on four waves of the European Values Study collected in an almost 30 years timeframe from 1990 until 2017. Evidence is provided to demonstrate that values of regional trust remain substantially stable over the entire period and are modified only through spatially correlated random noise processes. This finding is consistent with additional analyses based on spatial regression models identifying slow-moving factors responsible for the geographic distribution of trust scores and buried deep in the cultural background of a society. Whereas the low values in post-communist countries are exhaustively explained based on their institutional and cultural setup, the high Nordic scores remain significant even after inclusion of control variables. The dominant driving force of regional trust is represented by an open society with emphasis on free expression rather than survival values rooted in a focus on economic physical security. Whereas both institutional and educational frameworks are only of minor importance, a high degree of social heterogeneity is clearly detrimental for trust after controlling for GDP per capita. Hence, in spite of its economic significance, social trust does not appear to be amenable to political intervention in the short to medium term but neither should it be responsive to sudden crisis effects.

Mariluz Mate (p)

Christoph Hauser

In the contemporary landscape of heightened business competition, the identification of strategic determinants of business success assumes paramount importance. Notably, spatial factors and their potential interaction effects among proximate businesses have garnered substantial attention. However, existing research has yielded inconclusive findings. Some scholars posit that the observed spatial associations among neighboring businesses may stem from endogeneity issues tied to regional economic characteristics. This study delves into the influence of spatial factors on business failure. To this end, we introduce a methodological framework proposing a Spatial Differences-in-Differences (SDID) model with interaction effects. This specification enables us to ascertain whether the spatial configuration of businesses exerts a causal impact on their risk of failure, while also mitigating potential confounding factors that might engender spurious relationships. We empirically apply our approach to a sample of small and medium-sized enterprises operating in the industrial sector within the municipality of Madrid. Our model’s results reveal a compelling causal relationship between the spatial distribution of these businesses and their likelihood of failure: businesses facing financial risks and situated in areas with a high business density exhibit a reduced probability of failure. Additionally, we uncover a positive contagion effect among nearby enterprises. We conclude that spatial factors wield a dual influence on the likelihood of business failure. This study underscores the imperative of incorporating spatial considerations into the analysis of business financial behavior and furnishes empirical evidence supporting the causal impact of space on business failure.

Andree Ehlert (p), Andreas Lagemann, Jan Wedemeier

Mariluz Mate

The specific economic, social and health-related developments of the last decade have led to increasing heterogeneity on the real estate market in many regions, with far-reaching macroeconomic consequences. These include, for example, the sharp decline in financing costs in historical comparison, the increasing attractiveness of urban living spaces in the 2010s and, more recently, the frequently described (but often without statistical evidence) urban exodus in response to the restrictions on public freedom of movement in the wake of COVID-19.
In addition to these factors, price trends are influenced by regional characteristics (e.g. unemployment rate, purchasing power, age structure) and strong regional interdependencies, which makes the statistical modeling of small-scale data more complex. Finally, the real estate market has experienced additional uncertainty and disruption with the outbreak of COVID-19.
Based on a comprehensive regional panel data set for Germany (NUTS-3 level), we investigate the following questions quantitatively in a joint model framework: a) What influence does the socio-economic status of a region have on purchase and rental prices? b) To what extent did the regionally varying contact restrictions and case numbers during COVID-19 have a significant influence on property prices? c) In addition to a) and b), what role do regional interdependencies (spillover effects) play for real estate price trends?
To answer b), in addition to case and death figures at regional level, we also analyze the influence of the strength and effects of political lockdown measures (e.g. curfews, travel restrictions) for the first time, as these have a direct influence on the quality of housing in a region and thus on the demand to buy or rent.
Based on a discussion of various spatial econometric models (e.g. SAR, SEM, SAC), the above questions are analyzed for 401 German NUTS-3 regions using socio-economic data and a unique housing price dataset for the years 2012 to 2023. We also focus on the choice of spatial weighting matrices (to capture the spatial relationships between regions), which is often disregarded in the literature, and discuss the robustness of the results in detail.
For example, the results of the spatial models show that high regional COVID-19 incidences and contact restrictions have a significant negative impact on real estate prices. In addition, we find significant positive effects on property prices for factors directly related to housing demand, such as childcare, climatic conditions and recreational value.
The economic policy implications of our findings are discussed in detail.

André Luis S Chagas (p), Luiza Andrade

Andree Ehlert

As part of Brazil's environmental protection policy, the list of priority municipalities for prevention, monitoring, and control of deforestation in the Amazon was established in 2007. This list includes municipalities with extensive deforested areas or where the increase in deforestation has been significant. In the second chapter of this study, previously identified positive effects of this action in the literature (Assunção and Rocha, 2019; Souza-Rodrigues, 2011) are revisited, with a more detailed exploration of the spillover effects of this policy.

This spillover effect was initially introduced in the work of Andrade (2016) and Andrade and Chagas (2016), from which this chapter is an extension. Indeed, based on the results presented in these studies, Assunção et al. (2021) discuss the importance of this spillover using a different approach.

In this paper, the main argument is that being a neighbor to a priority municipality represents an exogenous variation to the presence of environmental authorities. In this case, selection bias for these municipalities would be mitigated. This work explores the difference-in-differences spatial estimator proposed in Chagas et al. (2016). The results suggest that the Priority Municipality List affects the listed municipalities, reducing the odds ratio of the annual deforested remaining forest area by around 50%. This effect increases if the treated municipality has many equally treated neighboring municipalities. The list also caused a 70% reduction in deforestation in non-listed neighbors of listed municipalities. These findings highlight the effectiveness of the policy and underscore the importance of considering spillover effects in the evaluation of environmental preservation initiatives.