Growth and Agglomeration in the Heterogeneous Space: A Generalized AK ApproachReport as inadecuate

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1 GREQAM - Groupement de Recherche en Économie Quantitative d-Aix-Marseille 2 IMéRA - Institute for Advanced Studies - Aix-Marseille University 3 Università degli Studi di Siena, Dipartimento di Economia Politica e Statistica 4 Dipartimento di Economia e Finanza, Università Luiss - Guido Carli

Abstract : We provide with an optimal growth spatio-temporal setting with capital accumulation and diffusion across space in order to study the link between economic growth triggered by capital spatio-temporal dynamics and agglomeration across space. We choose the simplest production function generating growth endogenously, the AK technology but in sharp contrast to the related literature which considers homogeneous space, we derive optimal location outcomes for any given space distributions for technology through the productivity parameter A and population. Beside the mathematical tour de force, we ultimately show that agglomeration may show up in our optimal growth with linear technology, its exact shape depending on the interaction of two main effects, a population dilution effect versus a technology space discrepancy effect.

Keywords : growth agglomeration heterogeneous and continuous space capital mobility infinite dimensional optimal control problems

Author: Raouf Boucekkine - Giorgio Fabbri - Salvatore Federico - Fausto Gozzi -



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