Global Growth and National Urban Development with Housing

Year 2020, , 382 - 421, 31.05.2020

Wei-bin Zhang

https://doi.org/10.25295/fsecon.2020.02.007

Abstract

The purpose of this study is to examine dynamic interactions among economic growth, housing markets, residential distribution and international trade. The paper builds a multi-country growth model with economic geography and capital accumulation. The unique feature of the paper is to introduce economic geography and housing markets into a multi-country growth model with microeconomic foundations. The model is developed by integrating the four well-known key models – the Solow growth model, the Oniki–Uzawa trade model, the Alonso urban model, and the Muth housing model – in growth theory, international growth economics and urban economics within a comprehensive framework. We show that the dynamics of the J -country world economy can be described by J differential equations. We also simulate the global economy with three countries.

Keywords

Trade Pattern, Residential Structure, Growth, Capital Accumulation

References

• Abel, A., Bernanke, B.S., and Croushore, D. (2007) Macroeconomics. New Jersey: Prentice Hall.
• Abdel-Rahman, H.M. (2004) The City System Paradigm: New Frontiers, in Urban Dynamics and Growth: Advances in Urban Economics, edited by Capello, R. and Nijkamp, P. Amsterdam: Elsevier.
• Agénor, P.R. (2004) Does Globalization Hurt the Poor? International Economics and Economic Policy 1, 21-51.
• Alonso, W. (1964) Location and Land Use. MA., Cambridge: Harvard University Press.
• Anas, A. (1978) Dynamics of Urban Residential Growth. Journal of Urban Economics 5, 66-87.
• Anas, A. (1982) Dynamics of Urban Residential Growth. Journal of Urban Economics 5, 66-87.
• Anas, A. (1990) Taste Heterogeneity and Urban Spatial Structure: The Logit Model and Monocentric Theory Reconciled. Journal of Urban Economics 28, 318-35.
• Arnott, R.J. (1980) A Simple Urban Growth Model with Durable Housing. Regional Science and Urban Economics 10, 53-76.
• Arnott, R. J. (1987) Economic Theory and Housing, in Handbook of Regional and Urban Economics, Volume II, edited by Mills, E.S. Amsterdam: North-Holland
• Arnott, R., Braid, R., Davidson, R. and Pines, D. (1999) A General Equilibrium Spatial Model of Housing Quality and Quantity. Regional Science and Urban Economics 29, 283-316.
• Baldwin, R.E. and Martin, P. (2004) Agglomeration and Regional Growth, in Handbook of Regional and Urban Economics, Vol. 4, edited by J.V. Hendersson and J.F. Thisse. Amsterdam: Elsevier.
• Beckmann, M.J. (1969) On the Distribution of Urban Rent and Residential Density. Journal of Economic Theory 1, 60-7.
• Beckmann, M.J. (1976) Spatial Equilibrium in the Dispersed City, in Mathematical Land Use Theory, edited by Papageorgiou, Y.Y, 117-25. MA., Lexington: Lexington Books.
• Beckmann, M.J. and Papageorgiou, Y.Y. (1989) Heterogeneous Tastes and Residential Location. Journal of Regional Science 29, 317-23.
• Berliant, M., Peng, S.K. and Wang, P. (2002) Production Externalities and Urban Configuration. Journal of Economic Theory 104, 275-303.
• Bhagwati, J.N. (1991, edited) International Trade - Selected Readings, second edition. Mass., Cambridge: The MIT Press.
• Borukhov, E. and Hochman, O. (1977) Optimum and Market Equilibrium in a Model of a City Without a Predetermined Center. Environment and Planning A 9, 849-56.
• Braid, R.M. (2001) Spatial Growth and Redevelopment with Perfect Foresight and Durable Housing. Journal of Urban Economics 49, 425-52.
• Brecher, R.A., Chen, Z.Q. and Choudhri, E.U. (2002) Absolute and Comparative Advantage, Reconsidered: The Pattern of International Trade with Optimal Saving. Review of International Economics, 10, 645-656.
• Brito, P.M.B. and Pereira, A.M. (2002) Housing and Endogenous Long-Term Growth. Journal of Urban Economics 51, 246-71.
• Brueckner, J.K. (1981) A Dynamic Model of Housing Production. Journal of Urban Economics 10, 1-14.
• Brueckner, J.K. and Pereira, A.M. (1994) Housing Ownership and the Business Cycle. Journal of Housing Economics 3, 165-85.
• Burmeister, E. and Dobell, A.R. (1970) Mathematical Theories of Economic Growth. London: Collier Macmillan Publishers.
• Capello, R. and Nijkamp, P. (2004, edited) Urban Dynamics and Growth: Advances in Urban Economics. Amsterdam: Elsevier.
• Chari, V.V. and Hopenhayn, H. (1991) Vintage Human Capital, Growth, and the Diffusion of New Technology. The Journal of Political Economy 99, 1142-65.
• DiPasquale, D. and Wheaton, W.C. (1996) Urban Economics and Real Estate Markets. Englewood Cliffs: Prentice Hall.
• Ethier, W.J. and Svensson, L.E.O. (1986) The Theorems of International Trade with Factor Mobility. Journal of International Economics 20, 21-42.
• Findlay, R. (1984) Growth and Development in Trade Models. In Jones, R.W., Kenen, R.B. (Eds.): Handbook of International Economics. Amsterdam: North-Holland.
• Forslid, R. and Ottaviano, G.I.P. (2003) An Analytically Solvable Core-Periphery Model. Journal of Economic Geography 3, 229-40.
• Frenkel, J.A. and Razin, A. (1987) Fiscal Policy and the World Economy. MA., Cambridge: MIT Press.
• Fujita, M. (1999) Urban Economic Theory – Land Use and City Size. Cambridge: Cambridge University Press.
• Fujita, M. and Thisse, J.F. (2002) Economics of Agglomeration: Cities, Industrial Location, and Regional Growth. Cambridge: Cambridge University Press.
• Glaeser, E.L. and Gyourko, J. (2005) Urban Decline and Durable Housing. Journal of Political Economy 113, 345-75.
• Glaeser, E.L., Kolko, J., and Saiz, A. (2001) Consumer City. Journal of Economic Geography 1, 27-50.
• Hashmi, A.R. (2013) Intangible Capital and International Income Differences. Macroeconomic Dynamics 17, 621-45.
• Henderson, J.V. (1974) The Sizes and Types of Cities. American Economic Review 64, 640-56.
• Henderson, J.V. (1985) Economic Theories and Cities. New York: Academic Press.
• Henderson, J.V., Schalizi, Z. and Venables, A.J. (2001) Geography and Development. Journal of Economic Geography 1, 81-105.
• Henderson, J.V. and Thisse, J.F. (2004, Eds.) Handbook of Regional and Urban Economics. Amsterdam: Elsevier.
• Hockman, O. and Pines, D. (1980) Costs of Adjustment and the Spatial Pattern of a Growing Open City. Econometrica 50, 1371-89.
• Ikeda, S. and Ono, Y. (1992) Macroeconomic Dynamics in a Multi-Country Economy - A Dynamic Optimization Approach. International Economic Review 33, 629-644.
• Imai, H. (1982) CBD Hypothesis and Economies of Agglomeration. Journal of Economic Theory 28, 275-99.
• Jensen, B.S. (1994) The Dynamic Systems of Basic Economic Growth Models. Dordrecht: Kluwer Academic.
• Jensen, B.S. and Wong, K.Y. (Eds.) (1998) Dynamics, Economic Growth, and International Trade. Ann Arbor: The University of Michigan Press.
• Johnson, H.G. (1971) Trade and Growth: A Geometric Exposition. Journal of International Economics 1, 83–101.
• Kanemoto, Y. (1980) Theories of Urban Externalities. Amsterdam: North-Holland.
• Kemp, M.C. (1961) Foreign Investment and National Advantage. Economic Record 28, 56-62.
• Krugman, P. and Venables, A.J. (1995) Globalization and the Inequality. Quarterly Journal of Economics 110, 857-80.
• Lee, S.F. (2011) Tariff, Growth, and Welfare. Review of International Economics 19, 260-76.
• Lin, C.C., Mai, C.C. and Wang, P. (2004) Urban Land Policy and Hosing in an Endogenously Growing Monocentric City. Regional Science and Urban Economics 34, 241-61.
• Lucas, R.E. (1988) On the Mechanics of Economic Development. Journal of Monetary Economics 22, 3-42.
• Lucas, R.E. and Rossi-Hansberg, E. (2002) On the Internal Structure of Cities. Econometrica 70, 1445-76.
• MacDougall, G.D.A. (1960) The Benefits and Costs of Private Investment from Abraod: A Theoretical Approach. Economic Record 27, 13-15.
• Manasse, P. and Turrini, A. (2001) Trade, Wages, and ‘Superstars’. Journal of International Economics 54, 97-117.
• Martin, P. and Ottaviano, G. (2001) Growth and Agglomeration. International Economic Review 42, 947-68.
• Miles, D. and Scott, A. (2005) Macroeconomics – Understanding the Wealth o Nations. Chichester: John Wiley Sons, Ltd.
• Mills, E.S. (1967) An Aggregative Model of Resource Allocation in Metropolitan Areas. American Economic Review 57, 197-210.
• Muth, R.F. (1969) Cities and Housing. Chicago: University of Chicago Press.
• Muth, R.F. (1973) A Vintage Model of the Housing Stock. Papers of the Regional Science Association 30, 141-156.
• Naito, T. and Ohdoi, R. (2011) A Two-Country Model of Trade and Growth with Intersectoral Knowledge Spillovers. Journal of Economics 103, 39-59.
• Nakajima, T. (2003) Catch-up in Turn in a Multi-Country International Trade Model with Learning-by-Doing and Intervention, Journal of Development Economics 72, 117-38.
• Nishimura, K. and Shimomura, K. (2002) Trade and Indeterminacy in a Dynamic General Equilibrium Model. Journal of Economic Theory 105, 244-60.
• Nocco, A. (2005) The Rise and Fall of Regional Inequalities with Technological Differences and Knowledge Spillovers. Regional Science and Urban Economics 35, 542-69.
• Obstfeld, M. and K. Rogoff (1998) Foundations of International Macroeconomics. Mass., Cambridge: MIT Press.
• O’Hara, D.J. (1977) Location of Firms Within a Square Central Business District. Journal of Political Econommy 85, 1189-207.
• Oniki, H. and Uzawa, H. (1965) Patterns of Trade and Investment in a Dynamic Model of International Trade. Review of Economic Studies 32, 15-38.
• Papageorgiou, Y.Y. and Smith, R.R. (1983) Agglomeration as Local Instability of Spatially Uniform Steadt-States. Econometrica 51, 1109-19.
• Rabenau, B.V. (1979) Urban Growth with Agglomeration Economics and Diseconomics. Geographia Polonica 42, 77-90.
• Richardson, B.V. (1973) Regional Growth Theory. New York: John Wiley.
• Robert-Nicound, F. (2004) The Structure of Simple ‘New Economic Geography’ Models (or, On Identical Twins). Journal of Economic Geography 5, 201-34.
• Solow, R. (1956) A Contribution to the Theory of Growth. Quarterly Journal of Economics 70, 65-94.
• Solow, R.M. (1973) On Equilibrium Models of Urban Location, in Essays in Modern Economics, edited by Parkin, M. London: Longman.
• Sorger, G. (2002) On the Multi-Country Version of the Solow-Swan Model. The Japanese Economic Review 54, 146-64.
• Tabuchi, T. and Thisse, J.F. (2002) Taste Heterogeneity, Labor Mobility and Economic Geography. Journal of Development Economics 69, 155-77.
• Upton, C. (1981) An Equilibrium Model of City Size. Journal of Urban Economics 10, 15-36.
• Valdés, B. (1999) Economic Growth – Theory, Empirics and Policy. Cheltenham: Edward Elgar.
• Vellutini, C. (2003) Capital Mobility and Underdevelopment Traps. Journal of Development Economics 71, 435-62.
• Wheaton, W.C. (2004) Commuting, Congestion, and Employment Dispersal in Cities with Mixed Land Use. Journal of Urban Economics 55, 417-38.
• Wong, K.Y., 1995. International Trade in Goods and Factor Mobility, Mass., Cambridge: MIT Press.
• Zhang, W.B. (1993) A Woman’s Labor Participation and Economic Growth: Creativity, Knowledge Utilization and Family Preference. Economics Letters 42, 105-110.
• Zhang, W.B. (1995) Leisure Time, Savings and Trade Patterns - A Two-Country Growth Model. Economic Modelling 12, 425-434.
• Zhang, W.B. (2008) Growth and Residential Distribution with Economic Structure and Amenity: A Synthesis of Solow-Uzawa’s Growth, Alonso’s Urban, and Muth’s Housing Models. Papers in Regional Science 87, 277-303.