Bridging the gap between growth theory and the new economic geography: The spatial Ramsey model

Raouf Boucekkine (), Carmen Camacho and Benteng Zou

Working Papers from Business School - Economics, University of Glasgow

Abstract: We study a Ramsey problem in in¯nite and continuous time and space. The problem is discounted both temporally and spatially. Capital flows to loca- tions with higher marginal return. We show that the problem amounts to optimal control of parabolic partial differential equations (PDEs). We rely on the existing related mathematical literature to derive the Pontryagin con- ditions. Using explicit representations of the solutions to the PDEs, we first show that the resulting dynamic system gives rise to an ill-posed problem in the sense of Hadamard (1923). We then turn to the spatial Ramsey problem with linear utility. The obtained properties are significantly dfferent from those of the non-spatial linear Ramsey model due to the spatial dynamics induced by capital mobility.

Keywords: Ramsey model; Economic geography; Parabolic partial differential equations; optimal control. (search for similar items in EconPapers)
JEL-codes: C61 C62 O41 (search for similar items in EconPapers)
Date: 2007-09
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: BRIDGING THE GAP BETWEEN GROWTH THEORY AND THE NEW ECONOMIC GEOGRAPHY: THE SPATIAL RAMSEY MODEL (2009)
Working Paper: Bridging the gap between growth theory and the new economic geography: The spatial Ramsey model (2009)
Working Paper: Bridging the Gap between Growth Theory and the New Economic Geography: the Spatial Ramsey Model (2009)
Working Paper: Bridging the gap between growth theory and the new economic geography: the spatial Ramsey model (2006)
Working Paper: Bridging the Gap between Growth Theory and the New Economic Geography: The Spatial Ramsey Model (2006)
Working Paper: Bridging the gap between growth theory and the new economic geography: The spatial Ramsey model (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2007_27

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