History versus expectations in economic geography reconsidered

Daisuke Oyama

Journal of Economic Dynamics and Control, 2009, vol. 33, issue 2, 394-408

Abstract: This paper studies global stability of spatial configurations in a dynamic two-region model with quadratic adjustment costs where rational migrants make migration decisions so as to maximize their discounted future utilities. A global analysis is conducted to show that, except for knife-edge cases with symmetric regions, there exists a unique spatial configuration that is absorbing and globally accessible whenever the degree of friction is sufficiently small, and such a configuration is characterized as the unique maximizer of the potential function of the underlying static model.

Keywords: Economic; geography; Multiple; equilibria; Forward-looking; expectation; Global; stability; Potential (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (30)

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Working Paper: History versus Expectations in Economic Geography Reconsidered (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:33:y:2009:i:2:p:394-408

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