Spatial agglomeration in a monetary multi-regional growth model with urban residential distribution

Abstract

The purpose of this study is to examine a dynamic interdependence between national and interregional growth, money, monetary policy, residential structures, spatial amenity, price of goods, land rent, housing rent in a comprehensive analytical framework. The economy consists of multiple regions and each region has industrial and housing sectors. The model is a synthesis of the four models in the growth theory, urban economics and monetary economics in a multi-regional context. Industrial production and capital accumulation follow the Solow model. Regional population distributes over the urban area according to the Alonso model and regional housing production follows the Muth model. The microeconomic foundation for determining time distribution, savings, spatial location and consumption follows the approach proposed by Zhang. We simulate the model and examine effects of changes in some parameters.