Spatial dynamics and convergence: the spatial AK model
We study the optimal dynamics of an AK economy where population is uniformly distributed along the unit circle. Locations only differ in initial capital endowments. Despite constant returns to capital, we prove that transition dynamics will set in. In particular, we prove that the spatio-temporal dynamics, induced by the willingness of the planner to give the same (detrended) consumption over space and time, lead to convergence in the level of capital across locations in the long-run.
|Date of creation:||16 Mar 2010|
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- 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).
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