EC356: City, Regions and Economic Policy

Roberto Pancrazi
Module Leader

15 CATS - Department of Economics

Introduction

This module explores the economics of space, place, and policy through major real-world questions about regional inequality, migration, productivity, and urban decline across countries such as Italy, Germany, India, China, the UK, France, Spain, and the United States. Combining empirical evidence with spatial equilibrium theory — including Rosen–Roback and Allen–Arkolakis frameworks — it examines policy debates on topics such as place-based subsidies, housing deregulation, transport infrastructure, and migration restrictions. Students engage in hands-on computational applications using MATLAB and real-world datasets, while a parallel methods strand develops practical skills in spatial data analysis and spatial econometrics in R using the same data sources employed by researchers and policymakers.

Principal Aims

• To provide students with a rigorous conceptual understanding of why economic activity is spatially unequal and why markets do not automatically resolve this inequality, building from Rosen–Roback spatial equilibrium through the Allen–Arkolakis quantitative spatial framework.

• To develop students' ability to evaluate place-based and spatial economic policies using both theoretical frameworks and international empirical evidence.

• To introduce students to the structure and analysis of spatial data, and to build practical skills in spatial econometrics using R and quantitative spatial modelling using MATLAB.

• To connect cutting-edge academic research to live policy debates across a range of country contexts — including the UK, Italy, France, Germany, Spain, and the United States.

• To prepare students for careers and postgraduate study that require the ability to handle, analyse, and communicate spatial evidence.

Principal Learning Outcomes

1. Explain the theoretical foundations of spatial economics, including Rosen–Roback spatial equilibrium, the Allen–Arkolakis quantitative framework, agglomeration economies, and trade models.

2. Analyse and compare the causes of regional wage and productivity disparities in a range of national contexts.

3. Critically evaluate the design and effectiveness of place-based policies using international empirical evidence.

4. Work with spatial datasets — including georeferenced microdata, regional administrative data, and GIS files — using R.

5. Apply spatial econometric methods to analyse regional economic outcomes, including spatial regression.

6. Communicate spatial economic analysis clearly in written and oral form to both specialist and non-specialist audiences.

Syllabus

The syllabus will cover some of the following topics:

The Spatial Economy; the distribution of economic activity and the role of policy; regional wage and productivity gaps; spatial reallocation and migration; ; agglomeration economies and congestion; spatial data and key international data sources; loading, cleaning, mapping, and visualising spatial data in R; spatial econometrics; spatial weights matrices and spatial autocorrelation; spatial lag and spatial error models; causal inference in regional settings; spatial equilibrium models; the Rosen–Roback model and the quantitative spatial framework; trade costs, labour mobility, and agglomeration in the AA framework; transport infrastructure and the spatial economy; hat algebra and counterfactual analysis; housing constraints and spatial misallocation; migration frictions, moving costs, and information barriers; incidence and welfare analysis; short-run and long-run adjustment dynamics; place-based policies and regional redistribution; intergenerational effects of spatial inequality; applications to contemporary policy debates in the UK, Europe, the United States, China, and India.

Context

Optional Module: L100 - Year 3, L103 - Year 4, LM1D (LLD2) - Year 3, LM1H - Year 4
Pre or Co-requisites: Modules: (EC201-30 and EC226-30) and (EC204-30 and EC203-30) and (EC204-30 and EC226-30)

Assessment