A multiregional endogenous growth model with forward looking agents
The paper presents a multiregional endogenous growth model designed for calibration with real world data and for numerical policy evaluation. It integrates four strands of research: (1) the Ramsey model of consumer behaviour, (2) Tobin's q-theory of investment, (3) Romer's theory of endogenous growth through horizontal product innovation, and (4) the Dixit-Stiglitz-Ethier theory of intra-industry trade. Integrating the latter into a multiregional model is also an essential ingredient of the New Economic Geography. Thus, the paper is related to this literature as well, but lacks another essential feature of this tradition; the model to be presented does not exhibit catastrophic agglomeration. A symmetric first nature will always generate a â€œflat earthâ€ steady state equilibrium. The model has an arbitrary (possibly large) number of regions with a representative household and a production sector in each of them. There are three types of goods, non-tradable local goods, horizontally diversified tradables, and designs of tradable products that are the exclusive property of their producers (called â€œblueprintsâ€ , for short). Goods are produced combining - in identical proportions for all three of them - four inputs, labour, capital local and tradable goods. Blueprint production benefits from a technological positive externality. Technologies and preferences are uniform across space. Beyond goods markets and real factor markets there is a frictionless global bond market. All markets are perfectly competitive except the tradables market, which is monopolistic in the familiar Dixit-Stiglitz-Ethier style. The engine of sustainable long run growth is the accumulation of blueprints. Agents act under perfect foresight. The paper explains the formal structure, the solution and calibration techniques and illustrates the application by a small example.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert J. Barro, 2013.
"Inflation and Economic Growth,"
Annals of Economics and Finance,
Society for AEF, vol. 14(1), pages 121-144, May.
- Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
- Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
- Bröcker, Johannes & Korzhenevych, Artem & Schürmann, Carsten, 2010. "Assessing spatial equity and efficiency impacts of transport infrastructure projects," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 795-811, August.
- Martin, Philippe & Rogers, Carol Ann, 1997. "Stabilization Policy, Learning-by-Doing, and Economic Growth," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 152-166, April.
- Martin, Philippe & Rogers, Carol Ann, 1995. "Stabilization Policy, Learning by Doing, and Economic Growth," CEPR Discussion Papers 1130, C.E.P.R. Discussion Papers.
- Roger E. A. Farmer, 1999. "Macroeconomics of Self-fulfilling Prophecies, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262062038.
- Abigail Barr, 1995. "The missing factor: entrepreneurial networks, enterprises and economic growth in Ghana," CSAE Working Paper Series 1995-11, Centre for the Study of African Economies, University of Oxford. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa11p1676. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.