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Spatial Development

Author

Listed:
  • Klaus Desmet

    (Universidad Carlos III de Madrid)

  • Esteban Rossi-Hansberg

    (Princeton University)

Abstract

We present a theory of spatial development. A continuum of locations in a geographic area choose each period how much to innovate (if at all) in manufacturing and services. Locations can trade subject to transport costs and technology diffuses spatially across locations. The result is an endogenous growth theory that can shed light on the link between the evolution of economic activity over time and space. We apply the model to study the evolution of the U.S. economy in the last few decades and find that the model can generate the reduction in the employment share in manufacturing, the increase in service productivity in the second part of the 1990s, the increase in land rents in the same period, as well as several other spatial and temporal patterns.

Suggested Citation

  • Klaus Desmet & Esteban Rossi-Hansberg, 2010. "Spatial Development," Working Papers 2010.26, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2010.26
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    File URL: https://www.feem.it/m/publications_pages/NDL2010-026.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Dynamic Spatial Models; Growth; Innovation; Land Rent Evolution; Structural Transformation; Technology Diffusion; Trade;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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