Resilience and Convergence: Short vs.Long-Run Regional Effects of Economic Crises and Macroeconomic Policies

Before the outbreak of the Great Recession, considerable attention wasdevoted to what makes a region successful, and why some regions growfaster than others, but researchers often overlooked how regions react toshocks and why this happens in a heterogeneous way. Furthermore, theclassic literature on regional inequalities has mainly focused on the longterm relationship between economic growth and regional disparities and onthe role of labor mobility, sometimes also as a mechanism of adjustment tolabor demand idiosyncratic shocks. This literature trend has reversed since2008, when investigation of the heterogeneous impact of shocks across areasbecame prominent in regional studies because also addressed was the issueof regional resilience. Therefore, also the discussion on the asymmetric effects of macroeconomic policies, which was not a major concern in recentdecades, has suddenly reemerged.Within-country disparities indeed increased during the 1980s, reflectinggains from economic concentration in some regions and relative stagnation inothers; but they intensified during the global financial crisis of 2008, thereforecalling for new ideas to support policy decisions. Similarly, the processes ofEuropean integration and reducing interregional disparities may have beenseverely jeopardised by the Great Recession, as perceived by many analystsjust after the outbreak of the crisis. This paper surveys the recent approaches adopted to study regional disparities as related not only to the process of economic growth but also to economic downturns. Starting from the analysis of the relationship betweennational business cycles and idiosyncratic regional shocks, we discuss the roleof macroeconomic policies and dynamics in affecting, through the impacton specific local assets, the process of (unequal) long-run regional growthas well as short-run resilience to economic shocks.