Transitional Dynamics in a Model of Economic Geography

1993 Lectures and Complex Systems, Eds. L. Nadel and D. L. Stein, Santa Fe Institute Studies in the Sciences of Complexity, Lecture Volume VI, New York: Addison Wesley, 1995; pp. 415-430.

9 Pages Posted: 3 Nov 2014

See all articles by Philip E. Auerswald

Philip E. Auerswald

George Mason University - Schar School of Government and Policy

Phil Auerswald

Independent

Date Written: December 1, 1993

Abstract

We build upon previous work by Dixit and Stiglitz (1977) and Krugman (1990) to introduce a model of economic geography in which agglomeration of production, a zero-profit competitive equilibrium, and an endogenously-driven industrial revolution arise out of the profit-maximizing choices made by firms and the utility-maxmizing choices made by workers/consumers. We further describe results that imply -- contrary to conclusions of much analytical work on business cycles -- that "sticky" wages actually appear to stabilize, rather than destabilize output and employment in a Krugman-type model of economic geography.

Keywords: economic geography, agglomeration, transitional dynamics, simulation

JEL Classification: C61, R10, R30

Suggested Citation

Auerswald, Philip Edgar and Auerswald, Phil, Transitional Dynamics in a Model of Economic Geography (December 1, 1993). 1993 Lectures and Complex Systems, Eds. L. Nadel and D. L. Stein, Santa Fe Institute Studies in the Sciences of Complexity, Lecture Volume VI, New York: Addison Wesley, 1995; pp. 415-430.. Available at SSRN: https://ssrn.com/abstract=2518214 or http://dx.doi.org/10.2139/ssrn.2518214

Philip Edgar Auerswald (Contact Author)

George Mason University - Schar School of Government and Policy ( email )

3351 Fairfax Dr.
Arlington, VA 22201
United States

HOME PAGE: http://auerswald.org

Phil Auerswald

Independent ( email )

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