Global Growth and National Urban Development with Housing

The purpose of this study is to examine dynamic interactions between economic growth, housing markets, residential distribution and international trade. The paper builds a multi-country growth model with economic geography and capital accumulation. It makes an original contribution to the literature of spatial economic growth by integrating economic geography and housing markets into a multi-country growth model with microeconomic foundations. The four basic models – the Solow growth model, the Oniki–Uzawa trade model, the Alonso urban model, and the Muth housing model – in economic theory are integrated within a comprehensive framework. This unique feature implies that many basic issues of spatial economics can be examined in a single framework. We show that the dynamics of the J-country world economy is described by J differential equations. We also simulate the global economy with three countries. Comparative dynamic analysis shows how different exogenous changes in the national preferences, technologies, land, and labor affect the global growth, national development, and spatial geography.