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The Dynamics of Growth and Migrations with Congestion Externalities

Author

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  • Orlando Gomes

    (Escola Superior de Comunicação Social)

Abstract

The paper develops a simple Solow-like growth model, with two independent geographical spaces, where migration is possible and it is stimulated by wage differences. The model assumes a congestion externality: high concentration of individual agents in one of the economic spaces implies losses in the ability to accumulate physical capital. Combining wage incentives, negative externalities of excessive concentration of people and a mechanism of discrete choice that governs the decisions concerning migrations, the analysis reveals that for some combinations of parameter values strange dynamics arise. A Neimark-Sacker bifurcation takes place, leading to endogenous cycles that describe the long term evolution of the capital accumulation and consumption variables. Also, the steady state will be characterized by never ending fluctuations on the share of individuals remaining in each one of the two assumed regions.

Suggested Citation

  • Orlando Gomes, 2007. "The Dynamics of Growth and Migrations with Congestion Externalities," Economics Bulletin, AccessEcon, vol. 15(1), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-06o40015
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    References listed on IDEAS

    as
    1. Brock, William A. & Hommes, Cars H., 1998. "Heterogeneous beliefs and routes to chaos in a simple asset pricing model," Journal of Economic Dynamics and Control, Elsevier, vol. 22(8-9), pages 1235-1274, August.
    2. Orlando Gomes, . "Volatility, Heterogeneous Agents and Chaos," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
    3. Stephanie Schmitt-Grohe, 2000. "Endogenous Business Cycles and the Dynamics of Output, Hours, and Consumption," American Economic Review, American Economic Association, vol. 90(5), pages 1136-1159, December.
    4. Orlando Gomes, 2006. "Local Bifurcations and Global Dynamics in a Solow-type Endogenous Business Cycles Model," Annals of Economics and Finance, Society for AEF, vol. 7(1), pages 91-127, May.
    5. Walz, Uwe, 1996. "Transport costs, intermediate goods, and localized growth," Regional Science and Urban Economics, Elsevier, vol. 26(6), pages 671-695, December.
    6. Marcus Berliant & Ping Wang, 2005. "Dynamic Urban Models: Agglomeration and Growth," Contributions to Economic Analysis, in: Urban Dynamics and Growth: Advances in Urban Economics, pages 533-581, Emerald Group Publishing Limited.
    7. Medio,Alfredo & Lines,Marji, 2001. "Nonlinear Dynamics," Cambridge Books, Cambridge University Press, number 9780521551861.
    8. Medio,Alfredo & Lines,Marji, 2001. "Nonlinear Dynamics," Cambridge Books, Cambridge University Press, number 9780521558747.
    9. Emilio Barucci, 1999. "Heterogeneous beliefs and learning in forward looking economic models," Journal of Evolutionary Economics, Springer, vol. 9(4), pages 453-464.
    10. Aloi, Marta & Dixon, Huw D. & Lloyd-Braga, Teresa, 2000. "Endogenous fluctuations in an open economy with increasing returns to scale," Journal of Economic Dynamics and Control, Elsevier, vol. 24(1), pages 97-125, January.
    11. Negroni, Giorgio, 2003. "Adaptive expectations coordination in an economy with heterogeneous agents," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 117-140, October.
    12. Baldwin, Richard E & Forslid, Rikard, 2000. "The Core-Periphery Model and Endogenous Growth: Stabilizing and Destabilizing Integration," Economica, London School of Economics and Political Science, vol. 67(267), pages 307-324, August.
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    More about this item

    Keywords

    Congestion externalities;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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