Aggregate supply in spatial general equilibrium theory. Issue 4 (1st October 2020)

• Record Type: Journal Article
• Authors: Beenstock, Michael
• Is Part Of: Spatial economic analysis. Volume 15:Issue 4(2020)
• Page Start: 374
• Page End: 391
• Publication Date: 2020-10-01
• Subjects: aggregate supply -- spatial general equilibrium -- spatial productivity; B22 -- J61 -- O18 -- R12; Space in economics -- Periodicals; Economic geography -- Periodicals; Space in economics -- Econometric models -- Periodicals; Urbanization -- Periodicals; Espace (Économie politique) -- Périodiques; Économétrie -- Périodiques; Géographie économique -- Périodiques; Économie industrielle -- Périodiques; Économie du travail -- Périodiques; Économie urbaine -- Périodiques; Politique économique -- Périodiques; Relations économiques internationales -- Périodiques; 330.9
• DOI: 10.1080/17421772.2020.1742928
• Languages: English
• ISSNs: 1742-1772

Abstract

ABSTRACT: Spatial general equilibrium (SGE) theory and macroeconomic theory have developed in isolation. This paper explores some implications of SGE theory for the aggregate supply of GDP in terms of spatial differences in total factor productivity (TFP) and amenities. We show, inter alia, that if internal labor mobility is imperfect, local productivity shocks may adversely affect GDP if they occur where TFP is low. These theoretical results raise existential questions about the interpretation of productivity shocks in macroeconomic models, and about the absence of amenity shocks in macroeconomic discourse.