Abstract
This study introduces space, transportation, and money into an economic growth model. Growth theory neglects the importance of transportation on economic growth and transportation economics fails to properly explain how changes in transportation conditions (such as technological improvement, infrastructure investment, and oil prices) affect long-term economic growth. By proposing a growth model with transportations, we try to explain effects of transportation on economic growth. Our model describes dynamic interactions among capital accumulation, travel time, housing, residential distribution, amenity, and endogenous time distribution among work, travel, and leisure. The study examines effects of inflation policy, transportation conditions, and other conditions on long-term economic growth and economic geography. The paper demonstrates a way to integrating some important models in the literature in economic growth theory, urban economics, and transportation research so that the significance of transportation systems upon economies can be properly analyzed.
Highlights
This study examines effects of transportation conditions and monetary policy on long-term economic growth
Growth theory neglects the importance of transportation on economic growth and transportation economics fails to properly explain how changes in transportation conditions affect long-term economic growth
The paper demonstrates a way to integrating some important models in the literature in economic growth theory, urban economics, and transportation research so that the significance of transportation systems upon economies can be properly analyzed
Summary
This study examines effects of transportation conditions and monetary policy on long-term economic growth. Formal economic growth theory fails to explain how economic growth is related to transportation conditions. Another important issue which is seldom studied in the literature of spatial economics is how money affects spatial economic growth. Relations between economic growth and transportation systems with money have been seldom examined in the literature of theoretical economics. A main reason for the omission of studying interactions of economic growth, money and transportation conditions is that the traditional economic growth lacks a suitable analytical framework.
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