Mechanics of Spatial Development

Trade, Development and Political Economy presents Lorenzo Caliendo, Won Park Hahn Professor of Global Affairs and Management; Professor of Economics; Deputy Dean, Jackson School of Global Affairs, Yale University.

We develop a dynamic spatial growth model to explore the role of trade and internal migration in the process of economic development. In our model, the best global and local ideas contribute to the local stock of knowledge. Global ideas diffuse more to regions that are relatively more exposed to international trade.

In addition, workers learn about local ideas and they diffuse these ideas across space and generate new insights to local producers when they move to another location. We show that the stock of ideas at each location can be characterized by a tractable system of difference equations and that there exists a unique balanced growth path of the economy.

We embed the diffusion of ideas through trade and migration into a multi-country, multi-region framework with internal and international trade, forward looking dynamic migration decisions and endogenous capital accumulation. We apply our framework to study the role that international trade and internal migration had on China’s spatial development since the 90’s. We take our model to the data in the year 1990.

We also show how that the dynamic hat algebra method can be applied to the detrended version of the model.

Professor Caliendo joined Yale School of Management in 2011. Before that, he was a Visiting Research Fellow at the International Economic Section, Department of Economics of Princeton University and a Lecturer in Economics at the University of Chicago. He received two Uruguayan National Prizes in Economics (Premio Raúl Trajtenberg and ACADECO).

He holds a BA in Economics (UCUDAL), a MCom (Auckland University), a MA in Economics and a PhD in Economics from the University of Chicago. He is also an Associate Professor of Economics at the Department of Economics of Yale University (by courtesy), a Faculty Research Fellow at the National Bureau of Economic Research, a member of the Research Staff at the Cowles Foundation for Research in Economics, affiliated Faculty to the Jackson Institute for Global Affairs at Yale University, and an Associate Editor at the Journal of International Economics.