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History versus expectations in economic geography reconsidered

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  • Oyama, Daisuke

Abstract

This paper studies global stability of spatial configurations in a dynamic two-region model with quadratic adjustment costs where rational migrants make migration decisions so as to maximize their discounted future utilities. A global analysis is conducted to show that, except for knife-edge cases with symmetric regions, there exists a unique spatial configuration that is absorbing and globally accessible whenever the degree of friction is sufficiently small, and such a configuration is characterized as the unique maximizer of the potential function of the underlying static model.

Suggested Citation

  • Oyama, Daisuke, 2009. "History versus expectations in economic geography reconsidered," Journal of Economic Dynamics and Control, Elsevier, vol. 33(2), pages 394-408, February.
    • Handle: RePEc:eee:dyncon:v:33:y:2009:i:2:p:394-408
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    More about this item

    Keywords

    Economic geography Multiple equilibria Forward-looking expectation Global stability Potential;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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