nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2012‒05‒22
27 papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

  1. AS-AD in the Standard Dynamic Neoclassical Model: Business Cycles and Growth Trends By Gillman, Max
  2. An extensive look at taxes: how does endogenous retirement affect optimal taxation? By William B. Peterman
  3. Financial Constraints, Endogenous Markups, and Self-fulfilling Equilibria By Jess Benhabib; Pengfei Wang
  4. Industry Dynamics and Indeterminacy in an OLG Economy with Endogenous Occupational Choice By Maria José Gil-Moltó; Dimitrios Varvarigos
  5. Lifetime Labor Supply and Human Capital Investments By Rodolfo Manuelli; Ananth Seshadri; Yongseok Shin
  6. The failure of Financial Macroeconomics and What to Do About It. By Jean-Bernard Chatelain; Kirsten Ralf
  7. The Political economy of environmental policy with overlapping generations By Karp, Larry; Rezai, Amon
  8. Approximating High-Dimensional Dynamic Models: Sieve Value Function Iteration By Peter Arcidiacono; Patrick Bayer; Federico Bugni; Jon James
  9. Equilibrium management of fisheries with altruistic overlapping generations By Ekeland, Ivar; Karp, Larry; Sumaila, Rashid
  10. Fiscal consolidation in an open economy By Christopher J. Erceg; Jesper Lindé
  11. Capital regulation, liquidity requirements and taxation in a dynamic model of banking By De Nicolò, Gianni; Gamba, Andrea; Luccetta, Marcella
  12. Social security family finance and demography By Jellal, Mohamed; Bouzahzah, Mohamed
  13. Job Hoarding By Ingmar Nyman; Matthew Baker
  14. Sudden Floods, Macroprudential Regulation and Stability in an Open Economy By Pierre-Richard Agénor; K. Alper; L. Pereira da Silva
  15. Social security family finance and demography By Jellal, Mohamed; Bouzahzah, Mohamed
  16. Macro-Prudential Policy in a Fisherian model of Financial Innovation By Javier Bianchi; Emine Boz; Enrique G. Mendoza
  17. MEASURING SEARCH FRICTIONS USING JAPANESE MICRODATA By Masaru Sasaki; Miki Kohara; Tomohiro Machikita
  18. Redistributive Politics and Government Debt in a Borrowing-constrained Economy By Ryo Arawatari; Tetsuo Ono
  19. Non-Renewable but Inexhaustible – Resources in an Endogenous Growth Model By Martin Stürmer; Gregor Schwerhoff
  20. Monetary Policy and Fiscal Limits with No-Default By Gliksberg, Baruch
  21. Trend growth expectations and US house prices before and after the crisis By Hoffmann, Mathias; Krause, Michael U.; Laubach, Thomas
  22. Croyances culturelles éducation et croissance By Jellal, Mohamed; Bouzahzah, Mohamed
  23. How do financial frictions affect the spending multiplier during a liquidity trap? By J. A. CARRILLO; C. POILLY
  24. Changes in the Effects of Monetary Policy on Disaggregate Price Dynamics By Christiane Baumeister; Philip Liu; Haroon Mumtaz
  25. House Price Dynamics: Fundamentals and Expectations By Eleonora Granziera; Sharon Kozocki
  26. The Money Value of a Man By Mark Huggett; Greg Kaplan
  27. Analysis of regional endogenous growth By R. Basile; Stefano Usai

  1. By: Gillman, Max (Cardiff Business School)
    Abstract: The paper shows how a dynamic neoclassical AS-AD can be derived and used to describe business cycles and growth trends to undergraduates. Derived within the Ramsey-Cass-Koopmans (RCK) model, the AS-AD is the stationary equilibrium of the deterministic dynamic general equilibrium framework. Allowing Solow exogenous growth, the AS-AD is derived along the balanced growth path equilibrium. The derivation first builds consumption demand, aggregate demand, and then aggregate supply through the equilibrium conditions and a closed form solution for the capital stock. Through a comparative static change in goods sector productivity, the paper shows the basic failing of the standard RBC model. Allowing a second comparative static change in the consumer's time endowment, this captures a change in the "external margin" of labor supply. These comparative statics enable explanation of the business cycle, and "Solow-plus" growth trends including education time and working time. In extension of RCK, the paper shows beyond the undergraduate level, how to derive AS-AD when including human capital and endogenous growth. This allows an endogenous change in the time endowment for work and leisure through a change in human capital productivity, with a similar but more fundamental AS-AD story of business cycles and growth trends.
    Keywords: Ramsey-Cass-Koopmans; supply; demand; state variable
    JEL: A22 A23 E13
    Date: 2012–05
  2. By: William B. Peterman
    Abstract: This paper considers the impact on optimal tax policy of including endogenously determined retirement in a life cycle model. Allowing individuals to determine when they retire causes the optimal tax on capital to increase by 75% because of two implicit changes in the aggregate labor supply elasticity. First, including endogenous retirement causes an increase in the overall aggregate labor supply elasticity since agents can change their labor supply on both the intensive and extensive margins. In response, the government limits the distortions from the tax policy by lowering the tax on labor and increases the tax on capital. Second, given that the choice to retire is more relevant for older individuals, endogenous retirement disproportionately increases older agent's elasticity compared to younger individuals. Ideally, the government would decrease the relative labor income tax on individuals when they are older and supply labor more elastically. However, in the absence of age-dependent taxes, the government mimics such a tax policy by further increasing the tax on capital. I find that the welfare lost from not accounting for endogenous retirement when solving for the optimal tax policy is equivalent to approximately one percent of lifetime consumption.
    Date: 2012
  3. By: Jess Benhabib; Pengfei Wang
    Abstract: We show that self-fulfilling equilibria and indeterminacy can easily arise in a simple financial accelerator model with reasonable parameter calibrations and without increasing returns in production. A key feature for generating indeterminacy in our model is the countercyclical markup due to the procyclical loan to output ratio. We illustrate, via simulations, that our financial accelerator model can generate rich business cycle dynamics, including hump-shaped output in response to demand shocks as well as serial autocorrelation in output growth rates.
    JEL: E02 E2 E44
    Date: 2012–05
  4. By: Maria José Gil-Moltó; Dimitrios Varvarigos
    Abstract: We model an oligopolistic industry that supplies intermediate goods in an overlapping generations economy. Agents can choose whether to provide labour or to become entrepreneurs and compete in the industry. The idea that entry is determined through occupational choice has major implications for the industry’s dynamics. We find that the industry’s convergence to the steady state equilibrium occurs through cyclical fluctuations, despite the lack of any type of exogenous shocks. Furthermore, the path of convergence is not uniquely determined, implying that differences in economic performance may not necessarily reflect differences in either structural characteristics or initial conditions.
    Keywords: Dynamic general equilibrium, Firms’ entry, Industry dynamics, Oligopoly.
    JEL: D50 L11
    Date: 2012–05
  5. By: Rodolfo Manuelli (Washington University in St. Louis and Federal Reserve Bank of St. Louis); Ananth Seshadri (University of Wisconsin--Madison); Yongseok Shin (Washington University in St. Louis and Federal Reserve Bank of St. Louis)
    Abstract: We develop a model of retirement and human capital investment to study the effects of tax and retirement policies. Workers choose the supply of raw labor (career length) and also the human capital embodied in their labor. Our model explains a significant fraction of the US-Europe difference in schooling and retirement. The model predicts that reforms of the European retirement policies modeled after the US can deliver 15-35 percent gains in per-worker output in the long run. Increased human capital investment in and out of school accounts for most of the gains, with relatively small changes in career length. JEL classification: E24; J24
    Keywords: Lifetime labor supply human capital
    JEL: E24 J24
  6. By: Jean-Bernard Chatelain (Centre d'Economie de la Sorbonne - Paris School of Economics); Kirsten Ralf (Ecole Supérieure du Commerce Extérieur (ESCE))
    Abstract: The bargaining power of international banks is currently still very high as compared to what it was at the time of the Bretton Woods conference. As a consequence, systemic financial crises are likely to remain recurrent phenomena with large effects on macroeconomic aggregates. Mainstream macroeconomic models dealing with financial frictions failed to explain at least eight features of the ongoing crisis. We therefore suggest two complementary assumptions : (I) A systemic bankruptcy risk stable equilibrium may be feasible, besides another stable equilibrium related to a stability corridor, (II) inefficient financial markets rarely ensure that the price of an asset is equal to its "fundamental long term value". Both assumptions are compatible with a structural research programme taking into account the Lucas' critique (1976) but may start a creative destruction process of the Lucas' view of business cycles theory.
    Keywords: Asset prices, liquidity trap, monetary policy, financial stability, business cycles, liquidity trap, dynamic stochastic general equilibrium models.
    JEL: E3 E4 E5 E6
    Date: 2012–05
  7. By: Karp, Larry; Rezai, Amon
    Abstract: A two-sector OLG model illuminates previously unexamined intergenerationaleffects of a tax that protects an environmental stock. A traded asset capitalizes the economic returns to future tax-induced environmental improvements, benefiting the current asset owners, the old generation. Absent a transfer, the tax harms the young generation by decreasing their real wage. Future generations benefit fromthe tax-induced improvement in environmental stock. The principalintergenerational conflict arising from public policy is between generationsalive at the time society imposes the policy, not between generations alive at different times. A Pareto-improving policy can be implemented under various political economy settings.
    Keywords: Natural Resources and Conservation, Economics, open-access resource, two-sector overlapping generations, resource tax, generational conflict, environmental policy, dynamic bargaining
    Date: 2012–05–07
  8. By: Peter Arcidiacono; Patrick Bayer; Federico Bugni; Jon James
    Abstract: Many dynamic problems in economics are characterized by large state spaces which make both computing and estimating the model infeasible. We introduce a method for approximating the value function of high-dimensional dynamic models based on sieves and establish results for the: (a) consistency, (b) rates of convergence, and (c) bounds on the error of approximation. We embed this method for approximating the solution to the dynamic problem within an estimation routine and prove that it provides consistent estimates of the model's parameters. We provide Monte Carlo evidence that our method can successfully be used to approximate models that would otherwise be infeasible to compute, suggesting that these techniques may substantially broaden the class of models that can be solved and estimated.
    Date: 2012
  9. By: Ekeland, Ivar; Karp, Larry; Sumaila, Rashid
    Abstract: We imbed a classic fishery model, where the optimal policy follows a Most Rapid Approach Path to a steady state, into an overlapping generations setting. The current generation discounts future generations’ utility flows at a rate possibly different from the pure rate of time preference used to discount their own utility flows. The resulting model has non-constant discount rates, leading totime inconsistency. The unique Markov Perfect equilibrium to this model hasa striking feature: provided that the current generation has some concern forthe not-yet born, the equilibrium policy does not depend on the degree of thatconcern.
    Keywords: Agriculture, Agriculture Operations, and Related Sciences, Natural Resources and Conservation, fisheries management, sustainable development, renewable resources, time inconsistency, hyperbolic discounting
    Date: 2011–12–10
  10. By: Christopher J. Erceg; Jesper Lindé
    Abstract: This paper uses a New Keynesian DSGE model of a small open economy to compare how the effects of fiscal consolidation differ depending on whether monetary policy is constrained by currency union membership or by the zero lower bound on policy rates. We show that there are important differences in the impact of fiscal shocks across these monetary regimes that depend both on the duration of the zero lower bound and on features that determine the responsiveness of inflation.
    Date: 2012
  11. By: De Nicolò, Gianni; Gamba, Andrea; Luccetta, Marcella
    Abstract: This paper studies the impact of bank regulation and taxation in a dynamic model where banks are exposed to credit and liquidity risk and can resolve financial distress in three costly forms: bond issuance, equity issuance or fire sales. We find an inverted U-shaped relationship between capital requirements and bank lending, efficiency, and welfare, with their benefits turning into costs beyond a certain threshold. By contrast, liquidity requirements reduce lending, efficiency and welfare significantly. On taxation, corporate income taxes generate higher government revenues and entail lower efficiency and welfare costs than taxes on non-deposit liabilities. --
    Keywords: Bank Regulation,Taxation,Dynamic Banking Model
    JEL: G21 G28 G33
    Date: 2012
  12. By: Jellal, Mohamed; Bouzahzah, Mohamed
    Abstract: In this paper we analyzed a model of endogenous fertility in presence of financial market assets and social security pensions. Given the children externality and in the absence of corrective policy, the fertility rate chosen in market economy is too low. Indeed, in his optimal choice of family size, the representative household does not take into account of this children externality which leads to a sub optimal demography. We have shown that an optimal demographic allocation exists and can be implemented through a subvention taxation policy if it is available
    Keywords: Fertility; social security; financial maket; old age security
    JEL: J13 H55 E2 J1 D1
    Date: 2012
  13. By: Ingmar Nyman (Hunter College); Matthew Baker (Hunter College)
    Abstract: We study a labor market in which principals and agents must search for a trading partner, and agents have private information about the value of a match. We show that competitive pressure can induce agents to lie and over-state the value of the match. This leads to insufficient frictional unemployment and search, and lower average productivity and utility. A fully tax-financed unemployment insurance can therefore eliminate the inefficiency. Moreover, because inefficient “job-hoarding” by workers occurs when there are many workers per job, the analysis provides a novel explanation for the stylized macroeconomic fact that labor productivity is procyclical.
    Keywords: Search; Private Information; Competition; Labor Productivity; Unemployment Insurance
    JEL: D24 D82 D83 E32 J64
    Date: 2012
  14. By: Pierre-Richard Agénor; K. Alper; L. Pereira da Silva
    Abstract: We develop a dynamic stochastic model of a middle-income, small open economy with a two-level banking intermediation structure, a risk-sensitive regulatory capital regime, and imperfect capital mobility. Firms borrow from a domestic bank and the bank borrows on world capital markets, in both cases subject to an endogenous premium. A sudden flood in capital flows generates an expansion in credit and activity, and asset price pressures. Countercyclical regulation, in the form of a Basel III-type rule based on real credit gaps, is effective at promoting macroeconomic stability (defined in terms of the volatility of a weighted average of inflation and the output gap) and financial stability (defined in terms of the volatility of a composite index of the nominal exchange rate and house prices). However, because the gain in terms of reduced volatility may exhibit diminishing returns, a countercyclical regulatory rule may need to be supplemented by other, more targeted, macroprudential instruments.
    Date: 2012
  15. By: Jellal, Mohamed; Bouzahzah, Mohamed
    Abstract: In this paper we analyzed a model of endogenous fertility in presence of f financial market assets and social security pensions. Given the children externality and in the absence of corrective policy, the fertility rate chosen in market economy is too low. Indeed, in his optimal choice of family size, the representative household does not take into account of this children externality which leads to a sub optimal demography. We have shown that an optimal demographic allocation exists and can be implemented through a subvention taxation policy if it is available
    Keywords: Fertility; social security; family transfers; financial market; taxation policy
    JEL: J13 H55 E2 J1
    Date: 2012
  16. By: Javier Bianchi; Emine Boz; Enrique G. Mendoza
    Abstract: The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification mechanism to study the effects of macro-prudential policy. Financial innovation enhances the ability of agents to collateralize assets into debt, but the riskiness of this new regime can only be learned over time. Beliefs about transition probabilities across states with high and low ability to borrow change as agents learn from observed realizations of financial conditions. At the same time, the collateral constraint introduces a pecuniary externality, because agents fail to internalize the effect of their borrowing decisions on asset prices. Quantitative analysis shows that the effectiveness of macro-prudential policy in this environment depends on the government's information set, the tightness of credit constraints and the pace at which optimism surges in the early stages of financial innovation. The policy is least effective when the government is as uninformed as private agents, credit constraints are tight, and optimism builds quickly.
    JEL: D62 D82 E32 E44 F32 F41
    Date: 2012–05
  17. By: Masaru Sasaki (Osaka University); Miki Kohara (Osaka University); Tomohiro Machikita (IDE-JETRO)
    Abstract: This paper estimates matching functions to measure search frictions in the Japanese labor market and presents determinants of search duration to explain the effect of unemployment benefits on a job seekerfs behavior. We employ administrative micro data that track the job search process of individuals who left or lost their job in August 2005 and subsequently registered at their local public employment service. Our finding is that the matching function would exhibit decreasing returns-to-scale for job seekers and vacancies, rather than constant return-to-scale. We also find that generous unemployment benefits lengthen (shorten) the duration of job search for job seekers who voluntarily (involuntarily) leave employment.
    Keywords: Job Search, Matching Model, Unemployment, Unemployment Benefits
    JEL: J64 J65
    Date: 2011–02
  18. By: Ryo Arawatari (Graduate School of Economics, Nagoya University); Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: We develop a two-period, three-class of income model where low-income agents are borrowing constrained because of capital market imperfections, and where redistributive expenditure is financed by tax and government debt. When the degree of capital market imperfection is high, there is an ends-against-the-middle equilibrium where the constrained low-income and the unconstrained high-income agents favor low levels of government debt and redistributive expenditure; these agents form a coalition against the middle. In this equilibrium, the levels of government debt and expenditure might be below the efficient levels, and the spread of income distribution results in a lower debt-to-GDP ratio.
    Keywords: Government debt; Borrowing constraints; Voting; Structure-induced equilibrium; Income inequality.
    JEL: D72 H52 H60
    Date: 2011–01
  19. By: Martin Stürmer (Institute for International Economic Policy (IIW), University of Bonn); Gregor Schwerhoff (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: This paper proposes an endogenous growth model with an essential non-renewable resource, where economic growth enables firms to invest in innovation in the extraction technology and to allocate more capital to resource extraction. Innovation in the extraction technology offsets the deterioration of ore qualities and keeps the production costs of the non-renewable resource constant. Aggregate output as well as production and use of the non-renewable resource increase exponentially. Our model explains the long-run trends of non-renewable resource prices and world production over more than 200 years. If historical trends in technological progress and in the deterioration of ore qualities continue, it is in the realm of possibility that non-renewable resources are de facto inexhaustible. Our results suggest that the industrialization in China and other emerging economies contributes to keeping non-renewable resource prices constant in the long run.
    Keywords: Non-Renewable Resources, Endogenous Growth, Extraction Technology
    JEL: O44 Q32 Q33
    Date: 2012–05
  20. By: Gliksberg, Baruch (Department of Economics, University of Haifa)
    Abstract: This paper discusses monetary and fiscal interactions in fiscal stress with no outright default. Two distortions prevail in the economy: income taxes and liquidity constraints. Possible obstructions to fiscal policy include: a ceiling on the equilibrium Debt-to-GDP ratio; zero elasticity of tax revenues; a political intolerance of rising tax rates; A Laffer curve emerges endogenously. In equilibrium, fiscal solvency is brought about through adjustments to the level of nominal prices. Three regimes achieve this goal: FC - an interaction of a fiscal rule that targets both output and public debt with a neutral monetary policy; FD - an interaction of a fiscal rule that targets the primary deficit with an active monetary policy; FDA - an interaction of an austere fiscal rule with a passive monetary policy.
    Keywords: Distorting Taxes; Finance Constraint; Fiscal Limits; Fiscal Rules; Fiscal Theory of Prices;
    JEL: E42 E62 E63 H60
    Date: 2012–04–30
  21. By: Hoffmann, Mathias; Krause, Michael U.; Laubach, Thomas
    Abstract: We provide an analysis that might help distinguish rationally justified movements in house prices from potentially non-rational movements, using a two-sector business cycle model, in which investment in housing is subject to collateral constraints. A large portion of the evolution of U.S. house prices during the past 20 years can be reproduced when expectations of future income growth as published in surveys are used as an input into the model. Changes in growth expectations translate into corresponding changes in house prices, since the value of housing must be linked to expected aggregate income. Only since about 2005 do actual and model-implied house prices clearly diverge, calling for explanations not based on economic fundamentals. --
    Keywords: House prices,trend growth,Kalman filter,real-time data,borrowing constraints
    JEL: E13 E32 D83 O40
    Date: 2012
  22. By: Jellal, Mohamed; Bouzahzah, Mohamed
    Abstract: We consider a growth model with education, externalities and a cultural norm . We show that endogenous emergence of this cultural belief may lead to increasing the stock of human capital and accelerating national growth.The mechanism of this internalization is based on the existence of endogenous social status or identity pattern that encourages to the accumulation of knowledge. This cultural norm is presented as an informal mechanism which may be an effective substitute tool to a the formal institution given by a system of income taxation.
    Keywords: Culture; Beliefs; Education; Growth
    JEL: O43 I21 D83
    Date: 2012
    Abstract: We show that credit market imperfections substantially increase the government-spending multiplier when the economy enters a liquidity trap. This …finding is explained by the tight association between capital goods and …rmscollateral, a relationship that we highlight as the capital-accumulation channel. During a liquidity trap, a government spending expansion reduces the real interest rate, leading to a period of cheap credit. Entrepreneurs use this time to accumulate capital, which persistently improves their balance sheets and reduces their future costs of credit. A public spending expansion can thus encourage private investment, yielding consequently a large spending multiplier. This effect is further reinforced by Fishers debt- deation channel.
    Keywords: Financial Frictions, Zero Lower Bound, Fiscal Policy
    JEL: E62 E52
    Date: 2012–03
  24. By: Christiane Baumeister; Philip Liu; Haroon Mumtaz
    Abstract: We examine the evolution of the effects of monetary policy shocks on the distribution of disaggregate prices and quantities of personal consumption expenditures to assess the contribution of monetary policy to changes in U.S. inflation dynamics. Given that the transmission of monetary policy to aggregate inflation is determined by the responses of its underlying components, the degree of monetary non-neutrality is ultimately the result of relative price effects at the sectoral level. We provide evidence of considerable heterogeneity in sectoral price responses by introducing time variation in a factoraugmented vector autoregression model. Over time the majority of individual prices respond negatively after a contractionary monetary policy shock and the price dispersion diminishes. We link these empirical findings to a multi-sector DSGE model and show that they are consistent with firms’ heterogeneous pricing decisions and changes in the importance of the cost channel of monetary policy and the degree of wage flexibility.
    Keywords: Econometric and statistical methods; Transmission of monetary policy
    JEL: E30 E32
    Date: 2012
  25. By: Eleonora Granziera; Sharon Kozocki
    Abstract: We investigate whether expectations that are not fully rational have the potential to explain the evolution of house prices and the price-to-rent ratio in the United States. First,a Lucas type asset-pricing model solved under rational expectations is used to derive a fundamental value for house prices and the price-rent ratio. Although the model can explain the sample average of the price-rent ratio, it does not generate the volatility and persistence observed in the data. Then, we consider an intrinsic bubble model and two models of extrapolative expectations developed by Lansing (2006, 2010) in applications to stock prices: one that features a constant extrapolation parameter and one in which the extrapolation coefficient depends on the dividend growth process. We show that these last two models are equally good at matching sample moments of the data. However, a counterfactual experiment shows that only the extrapolative expectation model with timevarying extrapolation coefficient is consistent with the run up in house prices observed over the 2000-2006 period and the subsequent sharp downturn.
    Keywords: Asset pricing; Domestic demand and components; Economic models
    JEL: E3 E65 R21
    Date: 2012
  26. By: Mark Huggett (Georgetown University); Greg Kaplan (University of Pennsylvania)
    Abstract: This paper posits a notion of the value of an individual's human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We decompose the value of human capital into a bond, a stock and a residual value component. We find that (1) the bond component of human capital is larger than the stock component at all ages, (2) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (3) mean human capital returns exceed stock returns early in life and decline with age and (4) human capital returns and stock returns have a small positive correlation over the working lifetime.
    Keywords: Value of Human Capital, Return on Human Capital
    JEL: D91 E21 G12 J24
    Date: 2012–04
  27. By: R. Basile; Stefano Usai
    Abstract: Endogenous growth theory has deeply influenced regional growth analyses and inspired regional development policies. Evidence of lack of convergence, club convergence and spatial polarization of per worker income levels has led scholars to question the explanatory power of neoclassical exogenous growth models and to look at endogenous growth theories as proper frameworks to interpret regional development. In particular, those models, which emphasize the role of knowledge spillovers as driving forces for economic growth and identify a large set of self- reinforcing mechanisms that can potentially cause low-productivity traps, have become central in the scientific debate. Only during the last ten years, however, there have been some analytical attempts to regionalize endogenous growth theory. This paper provides a critical survey of the growing literature on regional extensions of endogenous growth analysis. The focus is on those theoretical and empirical studies which have tried to explain lack of regional convergence, multiple equilibria and spatial polarization. The paper also suggests some directions for future research in this field.
    Keywords: Endogenous growth; regional analysis
    JEL: R11 O4
    Date: 2012

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