A Calibrated Trade Model of Agglomeration

Paul Friesen and Stephen Kosempel

No 915, Working Papers from University of Guelph, Department of Economics and Finance

Abstract: This paper explores just how good the idea of international agglomeration of industry can be at explaining observed economic differences between countries. An international trade model with industrial agglomeration is outlined and calibrated to real data from the world's 10 largest countries by population, in order to assess how well it can explain the gap between rich and poor countries, observed trade volumes, price differences, and other types of data. The model is revealing in showing that, given the existing location of labor, an asymmetric exogenous distribution of firms is enough to generate income disparity and other stylized facts.

Keywords: trade and development; clustering; international agglomeration (search for similar items in EconPapers)
JEL-codes: F10 F20 O10 O50 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009
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Citations: View citations in EconPapers (1)

Published in Review of International Economics, 18 (4), 2010, 714-729.

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Journal Article: A Calibrated Trade Model of Agglomeration (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:gue:guelph:2009-15

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