Evidence and Implications of Zipf’s Law for Integrated Economies

Harry Bowen (), Haris Munandar and Jean-Marie Viaene

No 1743, CESifo Working Paper Series from CESifo

Abstract: This paper considers the distribution of output and productive factors among members of a fully integrated economy (FIE). We demonstrate that each member’s shares of total output and of total factors will be equal. This implies that growth in shares is random. If output and factor shares evolve as reflective geometric Brownian motion, then limiting distribution of these shares will exhibit Zipf’s law. Our empirics support Zipf’s law for U.S. states and for E.U. countries. These findings imply that models characterizing growth of members within an FIE should embody a key assumption: growth process of shares is random and homogeneous.

Keywords: growth; economic integration; factor price equalization; Zipf's law (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-geo and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Evidence and implications of zipf’s law for integrated economies (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1743

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