Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203624
Authors: 
Soretz, Susanne
Ott, Ingrid
Year of Publication: 
2019
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Political Economy - Inequality No. A11-V3
Abstract: 
We analyze within a spatial endogenous growth setting the impact of public policy coordination on regional inequality. Governments in each of the two symmetric regions provide a local public input that becomes globally effective due to integration. Micro-foundation of governmental behavior is based on three different coordination schemes: autarky, full or partial coordination. The "optimal" size of the local public inputs - as measured by the expenditure share ratios - differs depending upon the extent to which the governments take interregional interdependencies and feedback effects into account. The resulting spatial distribution of economic activity is driven by integration, which acts as dispersion force, and scale effects, which act as concentration force. The latter are drivers of regional inequality. Given full symmetry, local externalities cancel w.r.t to their impact on spatial concentration. We show that coordination of public decisions that base on productivity considerations unequivocally foster concentration and destabilize the spreading equilibrium. Regional inequality is thus an optimal result or put differently, the convergence goal can only be met by applying additional arguments.
Subjects: 
policy coordination
income convergence
bifurcation
JEL: 
H10
E60
O40
R50
Document Type: 
Conference Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.