A STOCHASTIC MODEL OF COMPETITION BETWEEN TWO CITIES FOR MEMBERS OF THE CREATIVE CLASS

Amitrajeet A. BATABYAL

Arthur J. Gosnell Professor of Economics, Department of Economics, Rochester Institute of Technology, Rochester, NY 14623-5604, USA

aabgsh@rit.edu

Seung Jick YOO

Graduate School of International Service, Sookmyung Women’s University, Seoul, Republic of Korea

sjyoo@sookmyung.ac.kr

*Corresponding Author

Abstract

Batabyal and Yoo (2019) have recently obtained a significant result in their analysis of the use of utilitarian and Rawlsian policies by two cities to attract the creative class. They show that if one city switches to a Rawlsian or more egalitarian objective when the other city remains utilitarian, the aggregate economy of two cities becomes less egalitarian. We show that this result depends fundamentally on the assumption that the creative class population can be described by a triangular probability distribution. If this population is modeled instead with an inverted triangular probability distribution then the above result is reversed in the sense that the welfare of the worst-off member of the creative class is always enhanced when one city switches to a Rawlsian or more egalitarian objective, irrespective of the objective of the other city.

Keywords: City, Competition, Creative Class, Rawlsian, Utilitarian

JEL classification: R11, D63
read more

THE EFFECTIVENESS OF HEALTH BUDGET IN REDUCING POVERTY: EVIDENCE IN INDONESIA

IDARYANI

M.Si, Economics and Business Faculty of Universitas Syiah Kuala, Indonesia

idaryaniaceh1@gmail.com

Masbar RAJA

Prof, Economics and Business Faculty of Universitas Syiah Kuala, Indonesia

raja.masbar@unsyiah.ac.id

ALIASUDDIN

Dr, Economics and Business Faculty of Universitas Syiah Kuala, Indonesia

aliasuddin@unsyiah.ac.id

Nasir MUHAMMAD

Dr, Economics and Business Faculty of Universitas Syiah Kuala, Indonesia

nasirmsi@unsyiah.ac.id

Abstract

The purpose of this study is to analyze the effectiveness of health expenditures in reducing poverty in Indonesia. The data used was panel data from three specific autonomous regions: Aceh, Papua, and West Papua, data from 2006-2017. The method of analysis used in the study was the ARDL Panel model. The results of the study show that in the short term, health expenditures o not affect poverty in the autonomous regions. The results from each region showed no short-term effect. Long-term estimates show that health spending can reduce poverty by up to 6 percent assuming cateris paribus. Adjustments of these impacts will occur every 9.6 months. This study recommends that the government increases the health budget so that the poor can get protection and avoid health problems. The study also recommends increased regulation of health expenditures to make it more effective and have an impact in the short term.

Keywords: Health Budget, Poverty, ARDL Panel, Special Autonomy

JEL classification: C23, H51, I38
read more

SPATIAL ANALYSIS OF THE IMPACT OF MIGRATION ON REGIONAL GROWTH IN IRAN (2006-16)

Shekoofeh FARAHMAND

Associate Professor, Economics Department, University of Isfahan, Iran

sh.farahmand@ase.ui.ac.ir

Narges GHASEMIAN

Ph.D candidate of economics, Alzahra University of Tehran, Iran

N.Ghasemian@alzahra.ac.ir

Abstract

One of the most important applications of economic growth models is for regional economic growth. In regional growth studies, it is necessary to consider spatial effects because of spatial dependence among the growth rates of regions. This research investigates the impact between net migration and its spatial lag on regional growth, based on the neoclassical (Solow) growth model. The used model in the study is the Dynamic Panel Data (DPD) which has been specified as a Spatial Durbin Model (SDM) and estimated by the spatial generalized method of moments (SGMM). The specified model has been tested for the 30 provinces of Iran in the period of 2006-16. The estimated results show that the time-lagged dependent variable had a positive and highly significant effect on income per capita. The impact of initial income per capita on growth is negative, and the convergence hypothesis is thus accepted. That is, poor provinces grow faster than the rich. The income per capita and growth are positively related to net migration rate. Expectedly, the new coming people to a province would increase income per capita and growth. The estimated coefficient of the spatial lag of the dependent variable is statistically significant and demonstrates spatial dependence in income as well as economic growth among the provinces of Iran. Every province’s growth rate was positively impacted by the economic growth of its neighbors. However, net migration has no spatial effect on income per capita and growth. In other words, the regional economic growth has not been influenced by migration to neighboring provinces.

Keywords: Neoclassical growth model, convergence, migration, spatial Durbin model, spatial generalized method of moments.

JEL classification: O47, C23, R23
read more