Global Growth and National Urban Development with Housing

Abstract

The purpose of this study is to examine dynamic interactions among economic growth, housing markets, residential distribution and international trade. The paper builds a multi-country growth model with economic geography and capital accumulation. The unique feature of the paper is to introduce economic geography and housing markets into a multi-country growth model with microeconomic foundations. The model is developed by integrating the four well-known key models – the Solow growth model, the Oniki–Uzawa trade model, the Alonso urban model, and the Muth housing model – in growth theory, international growth economics and urban economics within a comprehensive framework. We show that the dynamics of the J -country world economy can be described by J differential equations. We also simulate the global economy with three countries.