Nonlinear regional economic dynamics: Continuous-time specification, estimation and stability analysis

This paper presents an innovative approach to the study of regional economic dynamics within a nonlinear continuous-time econometric framework - a generalized specification of the Lotka-Volterra system of equations. This specification, which accounts for interdependent behavior of three industrial sectors and spillover effects of activities in neighboring regions, is employed in an analysis of five Italian regions between 1980 and 2003. For these regions, we report estimation results, characterize the varying systems dynamics, analyze the models' local and global stability properties, and determine via sensitivity analyses which structural features appear to exert the greatest influence on these properties. © Springer-Verlag 2007.