Spatial Economics for Granular Settings

47 Pages Posted: 2 Jun 2020

See all articles by Jonathan I. Dingel

Jonathan I. Dingel

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Felix Tintelnot

University of Chicago Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: May 2020

Abstract

We introduce a general-equilibrium model of a “granular” spatial economy populated by a finite number of people. Our quantitative model is designed for application to the growing body of fine spatial data used to study economic outcomes for regions, cities, and neighborhoods. Conventional approaches invoking the law of large numbers are ill-suited for such empirical settings. We evaluate quantitative spatial models’ out-of-sample predictions using event studies of large office openings in New York City. Our granular framework improves upon the conventional continuum-of-individuals model, which perfectly fits the pre-event data but produces predictions uncorrelated with the observed changes in commuting flows.

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Suggested Citation

Dingel, Jonathan I. and Tintelnot, Felix, Spatial Economics for Granular Settings (May 2020). NBER Working Paper No. w27287, Available at SSRN: https://ssrn.com/abstract=3615484

Jonathan I. Dingel (Contact Author)

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Felix Tintelnot

University of Chicago Department of Economics ( email )

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Chicago, IL 60637
United States

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