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Local Trade Networks and Spatially Persistent Unemployment

  • Nienke Oomes

    (International Monetary Fund)

This paper studies the effect of local trade networks on the spatial distribution of employment in a Cooper and John (1988) type model with effective demand externalities. It is shown that, if labor can be hired in continuous quantities, then the long run spatial distribution of employment is uniform, and independent of any trade network topology. When labor has binary support, however, local trade networks are shown to generate spatial unemployment clusters which can persist indefinitely.

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File URL: http://econwpa.repec.org/eps/it/papers/0211/0211004.pdf
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Paper provided by EconWPA in its series International Trade with number 0211004.

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Length: 63 pages
Date of creation: 19 Nov 2002
Date of revision:
Handle: RePEc:wpa:wuwpit:0211004
Note: Type of Document - pdf; prepared on Macintosh; to print on HP/PostScript; pages: 63 ; figures: included
Contact details of provider: Web page: http://econwpa.repec.org

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  1. N/A, 1998. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 163(1), pages 3-3, January.
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  11. Maurice Obstfeld & Kenneth Rogoff & Ben Bernanke & Kenneth Rogoff, . "The Six Major Puzzles in International Macroeconomics: Is there a Common Cause?," Working Paper 32326, Harvard University OpenScholar.
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  13. Rikhil Bhavnani & Natalia T. Tamirisa & Arvind Subramanian & David T. Coe, 2002. "The Missing Globalization Puzzle," IMF Working Papers 02/171, International Monetary Fund.
  14. Marcel Fafchamps, 2003. "Spontaneous Market Emergence," Economics Series Working Papers 138, University of Oxford, Department of Economics.
  15. Brian Krauth, 2000. "Social Interactions, Thresholds, and Unemployment in Neighborhoods," Discussion Papers dp00-12, Department of Economics, Simon Fraser University, revised 28 Mar 2000.
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  19. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
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