The Geography of Path Dependence (joint with Dave Donaldson)
Abstract:
< span style="font-size: 11pt; font-family: 'Calibri','sans-serif';">How much of the distribution of economic activity today is determined by history ra ther than by geographic fundamentals? And if history matters, does it matte r much? We develop an empirical framework that enables answers to these que stions. Our model combines a workhorse model of trade subject to geographic frictions with an overlapping generations model of labor mobility also sub ject to spatial fractions. Both production and consumption potentially exhi bit local agglomeration and congestion externalities. We derive parameter c onditions, for arbitrary static and dynamic geographic scenarios, under whi ch equilibrium transition paths are unique and yet steady states may nevert heless be non-unique that is, where initial conditions (“history”) determin e long-run steady-state outcomes (“path dependence”). We then estimate the model’s parameters (which govern the strength of agglomeration externalitie s 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. At these parameter estimates o ur simulations - based on randomly reassigning the geographical incidence o f various shocks among members of similar regional clusters - imply the lon g arm of history has only small consequences for the distortions caused by spatial path dependence.
DTSTAMP:20260407T044535Z DTSTART:20180607T130000Z DTEND:20180607T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR