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Dynamic spatial general equilibrium

Kleinman, Benny, Liu, Ernest and Redding, Stephen J. (2021) Dynamic spatial general equilibrium. CEP Discussion Papers (1785). Centre for Economic Performance, LSE, London, UK.

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Abstract

We develop a dynamic spatial general equilibrium model with forward-looking investment and migration decisions. We characterize analytically the transition path of the spatial distribution of economic activity in response to shocks. We apply our framework to the re-allocation of US economic activity from the Rust Belt to the Sun Belt from 1965-2015. We find slow convergence to steady-state, with US states closer to steady-state at the end of our sample period than at its beginning. We find substantial heterogeneity in the effects of local shocks, which depend on capital and labor dynamics, and the spatial and sectoral incidence of these shocks.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2021 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
JEL classification: F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
F - International Economics > F1 - Trade > F15 - Economic Integration
F - International Economics > F5 - International Relations and International Political Economy > F50 - General
Date Deposited: 03 Mar 2022 15:30
Last Modified: 06 Mar 2022 00:03
URI: http://eprints.lse.ac.uk/id/eprint/113917

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