The Relevance of Amenities and Agglomeration for Dutch Housing Prices

In this paper we have combined concepts from the field of urban economics with views from the area of geographic economics (the New Economic Geography). This approach enabled us to depict both the significance of the characteristics of the city itself and that of its location. Cities which combine a favourable location in terms of distance to work with a variety of urban amenities appear to be the most attractive locations for people to live. These are relatively safe cities, offering a variety of history and culture events, as well as good restaurants. In addition, successful cities are places where people can optimize their career prospects, not necessarily – as often assumed – as a result of business districts in these cities, but access to jobs from these cities.

Economic Geography and Economic Development in Sub-Saharan Africa

The physical or absolute geography of Sub-Saharan Africa (SSA) is often blamed for its poor economic performance. A country’s location however not only determines its absolute geography, it also pins down its relative position on the globe vis-à-vis other countries. This paper assesses the importance of relative geography, and access to foreign markets in particular, in explaining the substantial income differences between SSA countries. We base our empirical analysis on a new economic geography model. We first construct a measure of each SSA country’s market access based on bilateral trade flows and then assess the relevance of market access for economic development. In doing so, we explicitly distinguish between the importance of access to other SSA markets and to the rest of world respectively. We find that market access, and notably intra-SSA market access, has a significant positive effect on GDP per capita. This indicates that improving SSA market access (e.g. by investing in intra- SSA infrastructure or through increased SSA integration) will have substantial positive effects on its future economic development.Sub Saharan Africa, economic development, economic geography, market access

Geography Rules Too! Economic Development and the Geography of Institutions

To explain cross-country income differences, research has recently focused on the so-called deep determinants of economic development, notably institutions and geography. This paper sheds a different light on these determinants. We use spatial econometrics to analyse the importance of the geography of institutions. We show that it is not only absolute geography, in terms of for instance climate, but also relative geography, the spatial linkages between countries, that matters for a country’s gdp per capita. Apart from a country’s own institutions, institutions in neighboring countries turn out to be relevant as well. This finding is robust to various alternative specifications.

FDI and the Relevance of Spatial Linkages: Do third Country Effects Matter for Dutch FDI?

The aim of this paper is to test for the relevance of spatial linkages for Dutch (outbound) FDI. To do so, and based on recent FDI theories, we estimate a spatial lag model to assess the importance of spatial linkages for Dutch FDI to 18 host countries. As a determinant of FDI, space or geography also enters our empirical analysis through the market size and a corporate income tax variable. Our paper is among the few to date to take spatial linkages with respect to FDI into account. The Dutch case is also interesting because Dutch firms account for a large part of global FDI and related research has so far focused mainly on US FDI. After controlling for fixed effects, we find for our sample period 1984-2004 that third country effects matter, but the results are somewhat sensitive to sample and model selection. Apart from our benchmark spatial lag model, we discuss and estimate various alternative models notably by looking at European host FDI countries only, by dividing FDI into industry and services FDI and by estimating a spatial error model as well.

Trade Costs, Market Access and Economic Geography: Why the Empirical Specification of Trade Costs Matters

Trade costs are a crucial in new economic geography (NEG) models. The unavailability of actual trade costs data requires the approximation of trade costs. Most NEG studies do not deal with the ramifications of the particular trade costs specification used. This paper shows that the specification of trade costs matters. Estimations of a NEG wage equation for a sample of 80 countries show how the relevance of the key NEG variable, market access, depends upon the trade costs specification. Our conclusion is that NEG needs to (re-)examine the sensitivity of its empirical findings to the handling of trade costs.

The Relevance of Amenities and Agglomeration for Dutch Housing Prices

Dutch cities which combine a favourable location in terms of distance to work with a variety of urban amenities appear to be the most attractive locations for people to live. Relatively safe cities, offering a variety of history and culture events, as well as good restaurants have significantly higher housing prices. In addition, successful cities are places where people can optimize their job prospects, not necessarily only as a result of jobs in these cities, but also because of access to jobs in other Dutch cities.urban amenities, population growth, housing prices

Corporate control mechanisms, voting and cash flow rights, and the performance of Dutch firms

This paper exploits several unique institutional features in the Dutch system of corporate control to examine the relations among investor protections, concentrated ownership, and firm performance. Four conclusions emerge. First, controlling shareholders do not appear to ameliorate corporate governance problems to any great extent. Second, the identity of ownership matters; when a firm is controlled by a few large individual shareholders, firm performance suffers. Expropriation costs are very high for this type of investor. Third, and somewhat at odds with the bulk of the prevailing literature, performance is enhanced when the firm is freed of equity market constraints. These results are consistent with recent theoretical models emphasizing that too much oversight can be detrimental to performance by forcing firms to underinvest in physical or human capital. Fourth, we distinguish between voting rights providing the means for intervening in firm affairs and cash flow rights providing the required motivation. Considering both rights are important for the empirical results. Apart from its substantive contributions, the paper develops a new four-step estimation strategy to control for the reverse causation problem plaguing econometric studies of corporate control mechanisms and firm performance.

Putting New Economic Geography to the Test: Free-ness of Trade and Agglomeration in the EU Regions

Based on a new economic geography (NEG) model by Puga (1999), we use the equilibrium wage equation to estimate two key structural model parameters for the NUTS II EU regions. These estimations enable us to come up with an empirically grounded free-ness of trade parameter. In line with NEG theory, the estimation results show that a spatial wage structure exists for the EU regions. By going back to the theoretical model we then analyze the implications of the free-ness of trade parameter for the degree of agglomeration. Our main findings suggest that agglomeration forces still have only a limited spatial reach in the EU. Agglomeration forces appear to be rather localized. At the same time, confronting our empirical results with the underlying new economic geography model also brings out the limitations of empirical research in new economic geography.

Corporate control mechanisms, voting and cash flow rights, and the performance of Dutch firms

This paper exploits several unique institutional features in the Dutch system of corporate control to examine the relations among investor protections, concentrated ownership, and firm performance. Four conclusions emerge. First, controlling shareholders do not appear to ameliorate corporate governance problems to any great extent. Second, the identity of ownership matters; when a firm is controlled by a few large individual shareholders, firm performance suffers. Expropriation costs are very high for this type of investor. Third, and somewhat at odds with the bulk of the prevailing literature, performance is enhanced when the firm is freed of equity market constraints. These results are consistent with recent theoretical models emphasizing that too much oversight can be detrimental to performance by forcing firms to underinvest in physical or human capital. Fourth, we distinguish between voting rights providing the means for intervening in firm affairs and cash flow rights providing the required motivation. Considering both rights are important for the empirical results. Apart from its substantive contributions, the paper develops a new four-step estimation strategy to control for the reverse causation problem plaguing econometric studies of corporate control mechanisms and firm performance.

Top management team and board attributes and firm performance in the Netherlands

We survey the evidence on the relationship between board and top management team attributes and firm performance in the Netherlands (sample of 94 listed firms). To this aim we develop hypotheses by using sources from the strategic management and the corporate governance literature. Dutch corporations generally have a two-tier board system. We use the size of the top management team (TMT) and their average age as well as the size of the supervisory board (RVC) and the percentage of outside members as attributes of corporate performance. Our base model consists of two performance indicators: a composite financial accounting measure (of ROA, ROS, and ROE) and a market- based indicator (standardized stock prize increase). Control variables are: log of total assets as an indicator of the size of a firm, leverage and adjusted cash flow/total assets as indicators of financial structure, coefficients of variation of sales and ROA as measures of environmental uncertainty (dynamics), and diversification as a measure of risk-spread. In general, we conclude for the year 1996, that by using the base model, direct linear and non-linear relationships between the TMT/board variables and performance are not existent. Also, the interaction effects with environmental dynamics as a moderating variable are tested. From this analysis it becomes evident that, although environmental uncertainty has a clear direct relationship with performance, it has no significance as a moderating variable. Only in one case the interaction with size of the board leads to a significant result. Indicating (instead of the hypothesized inverted U-shaped relationship) a U-shaped relationship between RVC and performance.