Growth and agglomeration in the heterogeneous space: a generalized AK approach

Abstract

We provide an optimal growth spatio-temporal setting with capital accumulation and diffusion across space to study the link between economic growth triggered by capital spatio-temporal dynamics and agglomeration across space. The technology is AK, K being broad capital. The social welfare function is Benthamite. In sharp contrast to the related literature, which considers homogeneous space, we derive optimal location outcomes for any given space distributions for technology and population. Both the transitional spatio-temporal dynamics and the asymptotic spatial distributions are computed in closed form. Concerning the latter, we find, among other results, that: (i) due to inequality aversion, the consumption per capital distribution is much flatter than the distribution of capital per capita; (ii) endogenous spillovers inherent in capital spatio-temporal dynamics occur as capital distribution is much less concentrated than the (pre-specified) technological distribution; (iii) the distance to the center (or to the core) is an essential determinant of the shapes of the asymptotic distributions, that is relative location matters.

Distributed optimal control models in environmental economics: a review

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HJB Equations in Infinite Dimension and Optimal Control of Stochastic Evolution Equations Via Generalized Fukushima Decomposition

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“…Examples where the optimal control distributes as an eigenvector of A * arise in applied examples, see for instance[3,15] for some economic deterministic examples. In the mentioned cases the operator A is elliptic and self-adjoint.…”