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Equilibrium dynamics in a model of growth and spatial agglomeration

Published online by Cambridge University Press:  11 November 2021

Shota Fujishima  and
Daisuke Oyama
Shota Fujishima
Affiliation:
Graduate School of Economics, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo 186-8601, Japan
Daisuke Oyama*
Affiliation:
Faculty of Economics, University of Tokyo, Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
*
*Corresponding author. Email: oyama@e.u-tokyo.ac.jp
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Abstract

We present a multiregional endogenous growth model in which forward-looking agents choose their regions to live in, in addition to consumption and capital accumulation paths. The spatial distribution of economic activity is determined by the interplay between production spillover effects and urban congestion effects. We characterize the global stability of the spatial equilibrium states in terms of economic primitives such as agents’ time preference and intra- and interregional spillovers. We also study how macroeconomic variables at the stable equilibrium state behave according to the structure of the spillover network.

Keywords

Growthagglomerationcontinuous-time overlapping generationsperfect foresight dynamicspotential functionspillover networkC62C73D62O41R13
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 1 , January 2023 , pp. 224 - 249
Copyright
© The Author(s), 2021. Published by Cambridge University Press

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