economic geography · Julian Hinz

Tariffs Hit Differently: The Regional Impact of US Tariffs across Europe and the Role of the Single Market

Gabriel Felbermayr — Fri, 12 Dec 2025 00:00:00 +0000

Changes in labor location under U.S. tariff shocks.

We study how recent U.S. tariffs ripple through European regions and how the EU Single Market cushions these shocks. Using a regionalized inter-country input–output framework with labor mobility, we embed 288 European NUTS2 regions in a global production network and quantify the heterogeneous effects of U.S. import protection.

Our counterfactuals compare outcomes under an integrated versus a fragmented Europe. Integration allows firms and workers to substitute along intra-EU value chains, which substantially lowers both average income losses and the dispersion of outcomes across regions. The results highlight how deep integration shapes the geography of trade policy exposure.

When dispersed teams are more successful: Theory and evidence from software

Gábor Békés — Sun, 15 Dec 2024 00:00:00 +0000

Visual representation of the model.

Who collaborates with whom when physical co-location is no longer a constraint? How does the geographic composition of teams influence project success? We develop a model of global team formation and collaboration in which individuals have heterogeneous and partially observable skills, collaboration incurs geographic frictions, and project success depends on the best idea developed in the team. The model yields five testable predictions: (I) collaboration is more likely among geographically proximate individuals; (II) only highly skilled individuals form long-distance collaborations due to selection effects; (III) geographically diverse teams produce higher-quality outcomes; (IV) the positive impact of diversity on success is stronger for more complex projects; and (V) there is a non-linear relationship between team size and project quality. We test these predictions using a highly granular dataset on open-source software development, where project success is measured through downstream usage. The open-source setting offers a unique empirical advantage: its transparency and absence of physical constraints allow us to isolate the role of team composition and collaboration frictions. Our findings confirm the model’s predictions and suggest that the benefits of dispersed collaboration extend beyond software development to other knowledge-intensive activities.

The View from Space: Theory-based Time-varying Distances in the Gravity Model

Julian Hinz — Sat, 15 Oct 2022 00:00:00 +0000

Aggregate distances over time (Exponents in generalized mean of -1 and 1). Commonly used time-invariant distances from Mayer and Zignago (2011) for comparison.

In this paper I use a general representation of the gravity model in international economics to derive a theory-consistent spatial aggregation of bilateral frictions. I apply the method to compute time-varying country-to-country distances, used in estimations of the gravity model in fields ranging from international trade, to foreign direct investment and migration. The aggregation takes the form of a weighted generalized mean, where the weights reflect the spatial distribution of economic activity in a country and the elasticity of the bilateral friction in question is a key parameter. I use annually available satellite imagery on nighttime light emissions for highly-detailed information on the economic geography of countries, capturing urban and rural areas and reflecting changes over time. Employing the computed distances in an application to the gravity equation of international trade yields a number of noteworthy results. Exploiting the time variation, I can estimate the distance elasticity while controlling for unobserved country-pair characteristics. Estimates for the distance coefficient are in the range of -0.5 and -1. Furthermore, the distances' use yields important consequences for estimates of other gravity variables: the border coefficient, i.e. the often puzzlingly large relative difference between internal and external trade, is reduced by between 30% and 50%. Regressions using simulated data confirm the theoretical and empirical findings.

Après-ski: The Spread of Coronavirus from Ischgl through Germany

Gabriel Felbermayr — Tue, 30 Nov 2021 00:00:00 +0000

Observed vs. counterfactual confirmed cases on May 9, 2020.

The Austrian ski resort of Ischgl is commonly claimed to be ground zero for the diffusion of the SARS-CoV-2 virus across Germany. Drawing on data for 401 German counties, we find that conditional on geographical latitude and testing behavior by health authorities, road distance to Ischgl is indeed an important predictor of infection cases, but — in line with expectations — not of fatality rates. Were all German counties located as far from Ischgl as the most distant county of Vorpommern-Rügen, Germany would have seen about 48% fewer COVID-19 cases. A simple diffusion model predicts that the absolute value of the distance-to-Ischgl elasticity should fall over time when inter- and intra-county mobility are unrestricted. We test this hypothesis and conclude that the German lockdown measures have halted the spread of the virus.

Frictions to intranational investment

Inga Heiland — Wed, 01 Jul 2020 00:00:00 +0000

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. We also aim to study the impact of major infrastructure developments during the 2000s through the lens of the model: The politically-driven roll-out of broadband internet access across the country and the rapid expansion of the flight route network driven by Norwegian Airlines. Finally, we aim to deliver ex-ante predictions for the effects of a railway line connecting Northern Norway to the country’s main rail network, as well as the effects of a change to the speed limit on major road connections.

Frictions impede assortative matching in a global market for talent

Keith Head — Wed, 01 Aug 2018 00:00:00 +0000