What the keynesian theory said about Portugal?

Martinho, Vítor João Pereira Domingues (2011): What the keynesian theory said about Portugal?

Abstract

This work aims to test the Verdoorn Law, with the alternative specifications of (1)Kaldor (1966), for the 28 NUTS III Portuguese in the period 1995 to 1999. It is intended to test, also in this work, the alternative interpretation of (2)Rowthorn (1975) about the Verdoorn's Law for the same regions and periods. With this study we want, also, to test the Verdoorn´s Law at a regional and a sectoral levels (NUTs II) for the period 1995-1999. The importance of some additional variables in the original specification of Verdoorn´s Law is also tested, such as, trade flows, capital accumulation and labour concentration. The main objective is to confirm the presence of economies to scale that characterise the polarisation process with cumulative causation properties, explaining regional divergence. By introducing new variables to the original specification of Verdoorn´s Law we intend to examine how the economies to scale are influenced by the consideration of factors related to the Polarisation (Keynensian tradition) and Agglomeration (spatial economics tradition) phenomena. This study analyses, yet, through cross-section estimation methods, the influence of spatial effects in productivity in the NUTs III economic sectors of mainland Portugal from 1995 to 1999, considering the Verdoorn relationship.

• Item Type: MPRA Paper
• Language: English
• Keywords: Verdoorn law; spatial autocorrelation; Portuguese regions
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

References

N. Kaldor. Causes of the Slow Rate of Economics of the UK. An Inaugural Lecture. Cambridge: Cambridge University Press, 1966.

R.E. Rowthorn. What Remains of Kaldor Laws? Economic Journal, 85, 10-19 (1975).

P.J. Verdoorn. Fattori che Regolano lo Sviluppo Della Produttivita del Lavoro. L´Industria, 1, 3-10 (1949).

N. Kaldor. Strategic factors in economic development. Cornell University, Itaca, 1967.

R.E. Rowthorn. A note on Verdoorn´s Law. Economic Journal, Vol. 89, pp: 131-133 (1979).

T.F. Cripps and R.J. Tarling. Growth in advanced capitalist economies: 1950-1970. University of Cambridge, Department of Applied Economics, Occasional Paper 40, 1973.

V.J.P.D. Martinho. The Verdoorn law in the Portuguese regions: a panel data analysis. MPRA Paper 32186, University Library of Munich, Germany (2011a).

V.J.P.D. Martinho. An alternative use of the Verdoorn law at the Portuguese nuts II level. MPRA Paper 32189, University Library of Munich, Germany (2011b).

V.J.P.D. Martinho. Spatial effects and Verdoorn law in the Portuguese context. MPRA Paper 32183, University Library of Munich, Germany (2011c).

R.J.G.M Florax.; H. Folmer; and S.J. Rey. Specification searches in spatial econometrics: the relevance of Hendry´s methodology. ERSA Conference, Porto 2003.