Spatial Growth with Exogenous Saving Rates
Anastasios Xepapadeas () and
No 1514, DEOS Working Papers from Athens University of Economics and Business
Economic growth has traditionally been analyzed in the temporal domain, while the spatial dimension is captured by cross-country income differences. Data suggest great inequality in income per capita across countries, and a slight but noticeable increase in inequality across nations (Acemoglu 2009). Seeking to explore the mechanism underlying the temporal evolution of the cross sectional distribution of economies, we develop a spatial growth model where saving rates are exogenous. Capital movements across locations are governed by a mechanism under which capital moves towards locations of relatively higher marginal productivity, with a velocity determined by the existing stock of capital. This mechanism leads to a capital accumulation equation augmented by a nonlinear diffusion term, which characterizes spatial movements. Our results suggest that under diminishing returns the growth process leads to a stable spatially non-homogenous distribution for per capita capital and income in the long run. Insufficient savings may lead to the emergence of persistent poverty cores where capital stock is depleted in some locations.
Keywords: Economic growth; space; capital flows; nonlinear diffusion; Solow model; steady state distributions; stability. (search for similar items in EconPapers)
JEL-codes: O4 R1 C6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
http://wpa.deos.aueb.gr/docs/Spatial.Growth.with.Exogenous.Saving.Rates.pdf First version (application/pdf)
Journal Article: Spatial growth with exogenous saving rates (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aue:wpaper:1514
Access Statistics for this paper
More papers in DEOS Working Papers from Athens University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Ekaterini Glynou ().