Spatial Inequalities and Expectations: The Role of Heterogeneity in Krugman's Model
Heterogeneity has often changed the results of multiplicity and stability of equilibriums. In this article, we extend a paper written by Krugman by introducing two different types of workers with different productivity. This framework enables us to understand the weight of history in spatial inequalities, which are becoming more and more apparent in the united states and in europe. Krugman results don't holds and we find that even with high interest rates, history could be reversed and expectations could lead to a different equilibriums.
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