19 juillet 2020

Economic Geography and Path Dependence

Here a lecture by Dave Donaldson (MIT).

The first part is a standard lecture presenting indicators of agglomeration and then the Krugman model to illustrate path dependence and finally the first empirical studies on this topic (David and Weinstein, Bleakley and Lin). If you already know all that, the lecture will become interesting after one hour when the Allen and Davidson model is presented. This quantitative model use historical data to study to what extent the current spatial economy is linked to historical shocks (path dependence) and they find significant effects. 
As it has been emphasized by Mark Roberts on twitter, a model like this is interesting to analyse various shock that now affect the economy in order to understand their long run impact:

"Work has potentially important implications when thinking about, eg, any shock that hits a region, inc. COVID-19, conflict & natural disasters and whether the region is ever fully able to “bounce back.” As such the idea of path dependence links to concepts of resilience". M. Roberts

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