Dynamic Urban Economics

Brian Greaney, Andrii Parkhomenko and Stijn Van Nieuwerburgh

No 33512, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a dynamic urban model combining features of quantitative spatial and macro-housing models. It includes multiple locations, forward-looking households, commuting, costly migration, uninsurable income risk, housing tenure choice, and housing frictions. The model operates in continuous time, with shocks and choices occurring at discrete intervals. This ``mixed time'' approach enables efficient computation of steady-state equilibria and transition dynamics, even with thousands of location pairs. Using a model of the San Francisco Bay Area, we show how forward-looking behavior, spatial frictions, and transition dynamics reshape estimated effects of spatially heterogeneous shocks and policies, traditionally studied with static models.

JEL-codes: C63 G11 J61 R10 R21 R23 R31 R52 (search for similar items in EconPapers)
Date: 2025-02
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