DP6786 Economic Linkages Across Space

Author(s): Henry G Overman, Patricia Rice, Anthony J Venables
Publication Date: April 2008
Keyword(s): New Economic Geography, Spatial linkages, Urban and regional policy, Urban systems
JEL(s): R00, R58
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6786

We develop a diagrammatic framework that can be used to study the economic linkages between regions or cities. Hitherto, such linkages have not been the primary focus of either the theoretical or empirical literatures. We use the framework to analyse the impact of shocks that occur in one region (eg productivity improvements or increases in housing supply) on other regions, highlighting the key adjustment mechanisms and their long run implications for incomes, the cost of living, and the spatial distribution of population. Our general approach provides a framework encompassing both the New Economic Geography and Urban Systems literatures. We link our approach to these literatures and review empirical studies that quantify the key mechanisms that we have identified.