Essays in Applied Economics

This work includes the results of a broad research carried out during the PhD course in Economics at the University of Genova. The first part of this work consists of two articles that can be ascribed to the literature on the long and short run economic impact of infrastructure. In particular, the first article is devoted to investigate the long-term impact of the Roman road network on today’s propensity to export following a micro funded model by Duranton et al. (2014) that links roads to trade. The paper main result is that, controlling for possible determinants of propensity to trade and for the lenght and the location of Roman road system dating back to 117 A.D., the latter still influences today’s propensity to export of the Italian NUTS-2 regions. Moreover, we investigate two potential channels underlying this result that have been highlighted in the previous literature. In particular, results in this paper confirm the well supported hypothesis in the literature that Roman roads are correlated with today’s roads even though they were not established on the same route. However our paper does not lend support to the idea that Roman roads foster current trade by influencing social capital. The second article deals on the literature on the economic impact of transport infrastructure, and in particular on the role that road infrastructure can have on innovative regional capacity. We follow the seminal contribution by Agrawal et al. (2017) and we estimate a model of "roads and innovation" where the innovative activity in 1988 is linked to the length of motorways system in 1983, in order to investigate the impact of motorways endowment on the innovative capacity in each Italian NUTS-3 region. The main challenging issue about the estimation of our model arises from the possible endogeneity of highways stock. To deal with this problem, we follow the "historical instrumental variable" approach by using the length of the ancient Roman roads system dating back to 117 A.D. as an instrument for the length of current motorways. Overall, our Instrumental Variable estimates indicate that 1983 highways network has a positive and significant impact on 1988 innovative capacity. Moreover, we find a declining role for highways over time. Furthermore, results suggest a spatial reorganization of economic activity rather than a pure net economic effect. The second part of this work contains an article that belongs to the literature on the multidimensional indexes of well-being. In particular, following the growing interest in new and better measures of development, we elaborate an index of development for the Republics that gained independence after the Soviet Union broke up. We base our analysis on a set of variables from the World Development Indicators database released by theWorld Bank. We select the variables through principal component analysis and we calculate the index using factorial analysis. Therefore, following the well supported hypothesis in the literature that good governance has a key positive influence on development, we compare this index with a proposed index of governance, elaborating data from the Worldwide Governance Indicators database of the World Bank. As expected, the correlation between our index of development and our index of governance is high. Finally we perform a cluster analysis to group country according to the two indices.