Aggregate supply in spatial general equilibrium theory

Michael Beenstock*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

Spatial general equilibrium (SGE) theory and macroeconomic theory have developed in isolation. This paper explores some implications of SGE theory for the aggregate supply of GDP in terms of spatial differences in total factor productivity (TFP) and amenities. We show, inter alia, that if internal labor mobility is imperfect, local productivity shocks may adversely affect GDP if they occur where TFP is low. These theoretical results raise existential questions about the interpretation of productivity shocks in macroeconomic models, and about the absence of amenity shocks in macroeconomic discourse.

Original languageEnglish
Pages (from-to)374-391
Number of pages18
JournalSpatial Economic Analysis
Volume15
Issue number4
DOIs
StatePublished - 2020

Bibliographical note

Publisher Copyright:
© 2020 Regional Studies Association.

Keywords

  • aggregate supply
  • spatial general equilibrium
  • spatial productivity

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