Bridging the Gap between Growth Theory and the New Economic Geography : The Spatial Ramsey Model
AbstractWe study a Ramsey problem in infinite and continuous time and space. The problem is discounted both temporally and spatially. Capital flows to locations 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 toderive the Pontyagin conditions. Using explicit representations of the solutions to the PDEs, we first show that the resulting dynamic gystem 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 botained properties are significantly different from those of the non-spatial linear Ramsey model dute to the spatial dynamics induced by capital mobility.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2006038.
Date of creation: 01 Oct 2006
Date of revision:
Ramsey model; Economic Geography; parabolic equations; optimal control;
Other versions of this item:
- Boucekkine, Raouf & Camacho, Carmen & Zou, Benteng, 2009. "Bridging The Gap Between Growth Theory And The New Economic Geography: The Spatial Ramsey Model," Macroeconomic Dynamics, Cambridge University Press, vol. 13(01), pages 20-45, February.
- BOUCEKKINE, Raouf & CAMACHO, Carmen & ZOU, Benteng, 2006. "Bridging the gap between growth theory and the new economic geography: the spatial Ramsey model," CORE Discussion Papers 2006072, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- BOUCEKKINE, Raouf & CAMACHO, Carmen & ZOU, Benteng, . "Bridging the gap between growth theory and the new economic geography: The spatial Ramsey model," CORE Discussion Papers RP -2090, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Raouf Boucekkine & Carmen Camacho & Benteng Zou, 2006. "Bridging the gap between growth theory and the new economic geography: The spatial Ramsey model," DEGIT Conference Papers c011_039, DEGIT, Dynamics, Economic Growth, and International Trade.
- Raouf Boucekkine & C. Camacho & B. Zou, 2007. "Bridging the gap between growth theory and the new economic geography: The spatial Ramsey model," Working Papers 2007_27, Business School - Economics, University of Glasgow.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-16 (All new papers)
- NEP-GEO-2006-12-16 (Economic Geography)
- NEP-URE-2006-12-16 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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