Macroeconomic Implications of Agglomeration

From Morris Davis, Jonas Fisher, and Toni Whited:

Cities exist because of the productivity gains that arise from clustering production and workers, a process called agglomeration. How important is agglomeration for aggregate growth? This paper constructs a dynamic stochastic general equilibrium model of cities and uses it to estimate the effect of lo- cal agglomeration on aggregate growth. We combine aggregate time-series and city-level panel data to estimate the model’s parameters via generalized method of moments. The estimates imply a statistically and economically significant impact of local agglomeration on the growth rate of per capita consumption, raising it by about 10%.

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar.
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1 Response to Macroeconomic Implications of Agglomeration

  1. Pingback: Links for 09-06-2013 | Symposium Magazine

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