Dynamic Spatial General Equilibrium

Stephen Redding, Benny Kleinman and Ernest Liu

No 16466, CEPR Discussion Papers from Centre for Economic Policy Research

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 reallocation 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.

Keywords: Spatial dynamics; Economic geography; Trade; Migration (search for similar items in EconPapers)
JEL-codes: F14 F15 R12 (search for similar items in EconPapers)
Date: 2021-08
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Related works:
Journal Article: Dynamic Spatial General Equilibrium (2023)
Working Paper: Dynamic spatial general equilibrium (2021)
Working Paper: Dynamic spatial general equilibrium (2021)
Working Paper: Dynamic Spatial General Equilibrium (2021)
Working Paper: Dynamic Spatial General Equilibrium (2021)
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