Quantitative Spatial Economics

Posted: 14 Aug 2017

See all articles by Stephen J. Redding

Stephen J. Redding

Princeton University

Esteban Rossi-Hansberg

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

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Date Written: August 2017


The observed uneven distribution of economic activity across space is influenced by variation in exogenous geographical characteristics and endogenous interactions between agents in goods and factor markets. Until the past decade, the theoretical literature on economic geography had focused on stylized settings that could not easily be taken to the data. This article reviews more recent research that has developed quantitative models of economic geography. These models are rich enough to speak to first-order features of the data, such as many heterogeneous locations and gravity equation relationships for trade and commuting. At the same time, these models are sufficiently tractable to undertake realistic counterfactual exercises to study the effect of changes in amenities, productivity, and public policy interventions such as transport infrastructure investments. We provide an extensive taxonomy of the different building blocks of these quantitative spatial models and discuss their main properties and quantification.

Suggested Citation

Redding, Stephen J. and Rossi-Hansberg, Esteban A., Quantitative Spatial Economics (August 2017). Annual Review of Economics, Vol. 9, pp. 21-58, 2017, Available at SSRN: https://ssrn.com/abstract=3017733 or http://dx.doi.org/10.1146/annurev-economics-063016-103713

Stephen J. Redding (Contact Author)

Princeton University ( email )

Princeton, NJ 08544-1021
United States

HOME PAGE: http://www.princeton.edu/~reddings/

Esteban A. Rossi-Hansberg

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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