Structural Change and Growth in a NEG model

Fabio Cerina and Francesco Mureddu ()

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: This paper presents a New Economic Geography model of structural change, agglomeration and growth. By assuming the same non-homothetic preference structure as Murata (2008), we obtain similar results in that a progressive reduction of trade costs allows the economy to pass from a pre-industrialized to an industrialized stage and then, within the latter, from a dispersed to an urbanized regime. However, the introduction of capital accumulation and the dynamic setting of our model open the door to a richer set of implications. First, an additional stage is introduced as, for some intermediate values of trade costs, a multiple equilibria regime emerges with the symmetric and the core-periphery equilibria stable at the same time. Second, the introduction of non-homotheticity introduces a new channel through which growth is affected by trade costs and agglomeration. In particular, integration is always growth-enhancing while agglomeration is growth-detrimental.

Keywords: structural change; non-homothetic preferences; agglomeration; growth (search for similar items in EconPapers)
JEL-codes: O11 O18 O41 R11 R12 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cis and nep-geo
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Related works:
Journal Article: Structural Change and Growth in a NEG Model (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cns:cnscwp:201118

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