Regional Economics, Trade, and Transport Infrastructure

Abstract: “Regional Policy in a Multiregional Setting: When the Poorest are Hurt by Subsidies” Regional subsidies have a positive short-term effect on the recipient regions, but as they alter migration patterns the long-term effects are less clear. This paper demonstrates using a three-region general equilibrium model that subsidising the poorest region may be to its detriment in the long term and thereby increase inter-regional inequality, if the subsidy draws firms from a nearby region that would function better as a production centre. The result has important implications for the design of regional policies, which are often applied simply according to per-capita incomes. “Learning to Export and the Timing of Entry to Export Markets” Standard trade models are essentially static and do not explain why entry to export markets would be delayed after the instant a firm is formed. This paper proposes a model that endogenously generates the timing of entry to new markets through a learning mechanism. Firms in the model gain experience by entering markets, which eases entry to subsequent markets. The mechanism motivates delays in entry to some markets. More productive firms are less sensitive to the learning effect and thus enter markets sooner and begin by exporting to larger markets. These predictions are confirmed using Swedish firm-level data. “Airports and the Production of Goods and Services” This paper estimates the effects of airport infrastructure on local employment in certain sectors, using data from the United States. Airport sizes are instrumented for using the 1944 National Airport Plan of the Civil Aeronautics Administration. Airport size is found to have a positive effect on local employment in tradable services, with an elasticity of approximately 0.1, and a negative effect on manufacturing. There is no measurable effect on non-tradable services. The results are relevant to the evaluation of airport improvement projects, which are often carried out using public funds.