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Persistence and path dependence: A primer

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  • Allen, Treb
  • Donaldson, Dave

Abstract

How much of the spatial distribution of economic activity today is determined by history rather than by geographic fundamentals? How long should we expect temporary local shocks to persist in their effects on local economic concentration? When will such shocks have permanent (i.e. path-dependent) consequences? This paper develops a simple dynamic model of economic geography—with many heterogeneous locations interacting through trade, migration, agglomeration externalities, and endogenous fertility—that delivers tractable answers to these questions. Our results highlight an important distinction between agglomeration spillovers that endogenously affect productivity (or amenities) contemporaneously and those that do so with a lag.

Suggested Citation

  • Allen, Treb & Donaldson, Dave, 2022. "Persistence and path dependence: A primer," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:regeco:v:94:y:2022:i:c:s0166046221000843
    DOI: 10.1016/j.regsciurbeco.2021.103724
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    2. Hanlon, W.Walker & Heblich, Stephan, 2022. "History and urban economics," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    3. Korn, Tobias, 2023. "The Persistent Consequences of Civil Conflict: Evidence from a New Measure for Subnational Conflict Exposure," Hannover Economic Papers (HEP) dp-711, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    4. Palsson, Craig, 2023. "The forces of path dependence: Haiti's refugee camps, 1937–2009," Explorations in Economic History, Elsevier, vol. 89(C).

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