Expectations and industry location: a discrete time dynamical analysis

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• 作者：Anna Agliari (1)
  Pasquale Commendatore (2)
  Ilaria Foroni (3)
  Ingrid Kubin (4)
  
• 关键词：New economic geography ; Expectations formation ; Footloose capital ; Piecewise smooth maps ; Border ; collision bifurcations ; R12 ; D84 ; C62
• 刊名：Decisions in Economics and Finance
• 出版年：2014
• 出版时间：April 2014
• 年：2014
• 卷：37
• 期：1
• 页码：3-26
• 全文大小：4,617 KB
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• 作者单位：Anna Agliari (1)
  Pasquale Commendatore (2)
  Ilaria Foroni (3)
  Ingrid Kubin (4)
  
  1. Department of Scienze Economiche e Sociali, Catholic University, Piacenza, Italy
  2. Department of Economics, University of Naples ‘Federico II- Naples, Italy
  3. Department of Statistica e Metodi Quantitativi, University of Milano-Bicocca, Milan, Italy
  4. Department of Economics, WU Vienna University of Economics and Business, Vienna, Austria
  
• ISSN：1129-6569

文摘

The new economic geography (NEG) aims to explain long-term patterns in the spatial allocation of industrial activities. It stresses that endogenous economic processes may enlarge small historic differences leading to quite different regional patterns—history matters for the long-term geographical distribution of economic activities. A pivotal element is that productive factors move to another region whenever the anticipated remuneration is higher in that region. Given the long-term nature of NEG analyses and the crucial role of expectations, it is astonishing that most of the existing models assume only na?ve or myopic expectations. However, a recent stream of the literature in behavioral and experimental economics shows that agents often use expectational heuristics, such as trend extrapolating and trend reverting rules. We introduce such expectations formation hypotheses into a NEG model formulated in discrete time. This modification leads to a system of two nonlinear difference equations (corresponding, in the language of dynamical systems theory, to a 2-dimensional piecewise smooth map) and thus enriches the possible dynamic patterns: with trend extrapolating (reverting) the symmetric equilibrium is less (more) stable; and it may lose stability only via a flip bifurcation (or also via a Neimark–Sacker bifurcation) giving rise to a period-doubling cascade (or also to quasi-periodic orbits). In both cases, complex behavior is possible; multistability, that is, the coexistence of locally stable equilibria, is pervasive; and border-collision bifurcations are also allowed. In this sense, our analysis corroborates some of the basic insights of the NEG.