Dynamic Spatial General Equilibrium

Benny Kleinman, Ernest Liu and Stephen Redding

No 29101, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We incorporate forward-looking capital accumulation into a dynamic discrete choice model of migration. We characterize the steady-state equilibrium; generalize existing dynamic exact-hat algebra techniques to incorporate investment; and linearize the model to provide an analytical characterization of the economy’s transition path using spectral analysis. We show that capital and labor dynamics interact to shape the economy’s speed of adjustment towards steady-state. We implement our quantitative analysis using data on capital stocks, populations and bilateral trade and migration flows for U.S. states from 1965-2015. We show that this interaction between capital and labor dynamics plays a central role in explaining the observed decline in the rate of income convergence across U.S. states and the persistent and heterogeneous impact of local shocks.

JEL-codes: F14 F15 R12 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-dge, nep-geo, nep-isf and nep-ure
Note: ITI
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Published as Benny Kleinman & Ernest Liu & Stephen J. Redding, 2023. "Dynamic Spatial General Equilibrium," Econometrica, Econometric Society, vol. 91(2), pages 385-424, March.

Downloads: (external link)
http://www.nber.org/papers/w29101.pdf (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29101

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29101

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().