Relationships between metropolitan, satellite and regional city size, spatial context and economic productivity

Project Summary

The project will provide an evidence base to support policy development options in relation to harnessing agglomeration economies in Australia’s cities and regions. This will be based on econometric analyses of Australian, EU and US datasets using panel, threshold and autoregressive approaches.

We will assemble datasets from secondary sources to permit panel econometric estimations for Australian cities, and for comparison models of US and EU cities. This will be addressed empirically using spatial endogenous threshold models. Explaining agglomeration economies would usually require predetermining a function of either continuous city size or a variable where city size is arbitrarily split into various categories. We estimate critical thresholds and their respective critical values from the data. The thresholds define the critical population where productivity increases or decreases.

The approach aims to understand agglomeration economies and diseconomies in the Australian context, by accounting for spatial factors such as the dispersed nature of Australian housing and the large distances between Australian cities. The findings will be compared internationally both empirically and with findings in the international literature.