The diffusion of economic activity across space: a new approach

Résumé : Dynamic spatial theory has been a fruitful approach to understand economic phenomena involving time and space. However, this new field has opened a set of questions still unresolved in the literature. For instance, the identification of the social optimal allocation of economic activity across time and space has not been ensured yet in economic growth. By means of a monotone method, we study in this paper the optimal solution of spatial Ramsey-type models. We analytically prove, under fairly general assumptions, the existence of a unique social optimum. The iterative nature of this approach also allows us to present a new algorithm to simulate the optimal trajectories of the economy. We provide two economic illustrations of our method. Firstly, we apply our existence result to the spatial growth model and to a framework for optimal land-use planning, concluding that these problems are well-posed. We then consider the spatial growth model in order to investigate the importance of capital mobility in economic growth. We particularly underline the spatial dynamic implications of this feature on social welfare and income inequality.
Type de document :
Pré-publication, Document de travail
PSE Working Papers n°2017-61. 2017
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Soumis le : jeudi 21 décembre 2017 - 14:38:38
Dernière modification le : jeudi 3 mai 2018 - 15:18:04

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  • HAL Id : halshs-01670532, version 1

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Carmen Camacho, Agustín Pérez-Barahona. The diffusion of economic activity across space: a new approach. PSE Working Papers n°2017-61. 2017. 〈halshs-01670532〉

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