From Gibrat's law to Zipf's law through cointegration?

Aurélie Lalanne and Martin Zumpe
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Aurélie Lalanne: GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique

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Abstract: This article investigates the role of cointegration in the context of urban growth processes. It proposes the use of cointegration tests to distinguish between two versions of Gibrat's law: a standard formalization with growth shocks that are iid across time and cities, and an alternative one with shocks that are only iid over time. It then shows that city-size distributions converge to Zipf's law under the standard version of Gibrat's law; in contrast, they are perfectly preserved under the alternative formalization. An empirical application to French data provides support for non-cointegrated city growth, and thus for the standard formalization.

Keywords: Gibrat’s law; Zipf’s law; Cointegration tests; Unit-root tests; Urban growth; Urban system (search for similar items in EconPapers)
Date: 2020-07-01
Note: View the original document on HAL open archive server: https://hal.science/hal-02639558
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Published in Economics Letters, 2020, 192, pp.109211. ⟨10.1016/j.econlet.2020.109211⟩

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Journal Article: From Gibrat’s law to Zipf’s law through cointegration? (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02639558

DOI: 10.1016/j.econlet.2020.109211

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