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  4. June 2020
  5. Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Reply

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Reply

  • James Feyrer
  • Erin Mansur
  • Bruce Sacerdote
American Economic Review
vol. 110, no. 6, June 2020
(pp. 1914–20)
See also: Comment by James and Smith (2020)
See also: Original paper by Feyrer, Mansur, and Sacerdote (2017)
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Abstract

Measuring the geographic spillovers from an economic shock remains a challenging econometric problem. In Feyrer, Mansur, and Sacerdote (2017) we study the propagation of positive shocks from the recent boom in oil and gas production in the United States. We regress changes in income per capita on new energy production per capita within increasingly larger geographic circles. James and Smith (2020) proposes instead a single regression of county income per capita on energy production from successively larger donuts around the county. This method controls for production outside of the circle of interest and is likely the appropriate estimation method for estimating the impact of within-county production. Their results suggest that FMS overestimates the impact of new production. We show that we can incorporate similar controls using our basic estimation method and that (unlike James and Smith) these controls do not significantly change our results. To explore these differences, we perform simulation exercises which show that the James-Smith estimation method is biased downward with the heterogeneous population distributions across counties that we observe in the data.

Citation

Feyrer, James, Erin Mansur, and Bruce Sacerdote. 2020. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution: Reply." American Economic Review, 110 (6): 1914–20. DOI: 10.1257/aer.20190448

Additional Materials

JEL Classification

  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
  • E32 Business Fluctuations; Cycles
  • J31 Wage Level and Structure; Wage Differentials
  • Q35 Hydrocarbon Resources
  • Q43 Energy and the Macroeconomy
  • R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics