Spatial dynamics and convergence: The spatial AK model

Boucekkine, Raouf;Camacho Pérez, Maria del Carmen;Fabbri, Giorgio
(2010) , 21 pages

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  • Boucekkine, RaoufUCLouvain
    Author
  • Camacho Pérez, Maria del CarmenUCLouvain
    Author
  • Fabbri, GiorgioUniversita di Napoli Parthenope
    Author
Abstract
We study the optimal dynamics of an AK economy where population is uniformly distributed along the unit circle. Locations only differ in initial capital endowments. Despite constant returns to capital, we prove that transition dynamics will set in. In particular, we prove that the spatio-temporal dynamics, induced by the willingness of the planner to give the same (detrended) consumption over space and time, lead to convergence in the level of capital across locations in the long-run.
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Boucekkine, R., Camacho Pérez, M. d. C., & Fabbri, G. (2010). Spatial dynamics and convergence: The spatial AK model (IRES Discussion papers 2010009). https://hdl.handle.net/2078.5/250353