Integrating macroeconomics and economic geography: the neoclassical growth model in spatial general equilibrium

Michael Beenstock*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

The neoclassical growth model and the Roback model of spatial general equilibrium (SGE) are integrated to study the joint determination of macroeconomic phenomena (gross domestic product (GDP) and the rate of interest) and spatial economic phenomena (the spatial distribution of gross regional product (GRP), employment and capital). If internal capital mobility is perfect and regional savings rates are homogeneous, GDP depends on SGE, but SGE does not depend on GDP. If saving rates are spatially heterogeneous, GDP and the rate of interest depend on SGE, but SGE does not depend on the rate of interest and GDP. If in addition capital is imperfectly mobile, macroeconomic outcomes such as GDP, the rate of interest and SGE are jointly determined. In general, therefore, the dichotomy between macroeconomics and economic geography breaks down.

Original languageEnglish
Pages (from-to)309-323
Number of pages15
JournalSpatial Economic Analysis
Volume19
Issue number3
DOIs
StatePublished - 2024

Bibliographical note

Publisher Copyright:
© 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

Keywords

  • integrating macroeconomics and economic geography
  • neoclassical growth model
  • Roback model
  • spatial general equilibrium

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