The Competence Centre for International Economics Research (FIW) kindly invites to participate in the Seminar in International Economics on the topic
Frictions to intranational investment
Thursday, 24th of March 2022, 3:00 p.m. (CET)
Due to illness of the presenter, this seminar had to be cancelled. As soon as a new date is fixed, we will announce it on our website.
The presentation is based on a joint work with Inga Heiland (Statistics Norway, University of Oslo).
Despite unhalted technological progress in transport and communication infrastructure over the past century, geographical and cultural distance remain major obstacles to the flow of goods and production factors to date. In this paper, we show that geographical and cultural distance forcefully shape intranational investment flows in Norway, preventing an efficient allocation of capital to firms. To that end, we derive a structural gravity equation of investment from a general equilibrium model with multiple locations, multiple assets, and information frictions. Based on the model, we identify frictions related to geographical distance, travel time, administrative borders, and language differences and quantify the loss in terms of portfolio efficiency caused by each individual friction and by gravity as a whole. Through the lense of the model, we also study the impact of a major infrastructure policy program from the 2000s: The government-funded roll-out of broadband internet access across the country.
The seminar series is organised by the Vienna Institute for International Economic Studies (wiiw) in co-operation with FIW, the Centre of Competence in International Economics. The seminar provides a forum for presentation and discussion of recent academic research in the field of international economics.