SMU SOE Seminar (Oct 24, 2018): The Geography of Path Dependence

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TOPIC:

THE GEOGRAPHY OF PATH DEPENDENCE

ABSTRACT How much of the spatial distribution of economic activity today is determined by history rather than by geographic fundamentals? And if history matters for the distribution, does it also matter for the total amount? This paper develops an empirically tractable theoretical framework that aims to provide answers to these questions. We derive parameter conditions, for arbitrary geographic scenarios, under which equilibrium transition paths are unique and yet steady states may nevertheless be non-unique that is, where initial conditions (\history") may determine long-run steady-state outcomes (\path dependence"). We also derive analytical expressions, functions of the particular geography in question, that provide upper and lower bounds on the aggregate welfare level that can be sustained in any steady-state. We then estimate the model's parameters (which govern the strength of agglomeration externalities and trade and migration frictions), by focusing on moment conditions that are robust to potential equilibrium multiplicity, using spatial variation across US counties from 1800 to the present. Our simulations imply that the location of economic activity in the US today is highly sensitive to variations geographically local historical shocks, and the analytical bounds suggest the possibility of larger historical shocks mattering in the long-run. Click here to view the paper. Click here to view the CV.
		PRESENTER Treb Allen Dartmouth College
		RESEARCH FIELDS Trade and Development
		DATE: 24 October 2018 (Wednesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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