Central Cities as Engines of Metropolitan Area Growth

30 Pages Posted: 10 Jul 2004

See all articles by Albert Sole-Olle

Albert Sole-Olle

University of Barcelona; CESifo (Center for Economic Studies and Ifo Institute)

Elisabet Viladecans-Marsal

University of Barcelona

Abstract

The paper analyzes the role of central cities as engines of economic growth in their metropolitan area. We wonder if there are increasing returns to central city growth at the metropolitan level arising from the positive externalities associated with the unique features of central cities. To answer this question we analyze the causality between the economic growth of Spanish central cities and the growth of the other jurisdictions belonging to their metropolitan area (i.e., the suburbs). The analysis uses population and economic activity data for a sample of 28 Spanish metropolitan areas during 35 years. We use a Vector Error Correction Model (VECM) framework to estimate long-run equilibrium relationships between the growth of central cities and their suburbs. The combination of panel data and a VECM is an innovative approach that is still being developed in econometrics. The results suggest that central city growth has a long-run positive effect on the growth of the suburbs. We also inquire as to whether or not this positive effect depends on the size of the central city. The results suggest that the effect is much higher in the case of the largest cities, but that it is also important in the case of the smaller ones.

Suggested Citation

Sole-Olle, Albert and Viladecans-Marsal, Elisabet, Central Cities as Engines of Metropolitan Area Growth. Journal of Regional Science, Vol. 44, No. 2, pp. 321-350, May 2004. Available at SSRN: https://ssrn.com/abstract=558873

Albert Sole-Olle (Contact Author)

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Elisabet Viladecans-Marsal

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

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