The dynamics of growth and distribution in a spatially heterogeneous world

Distributional extensions of the benchmark AK endogenous growth model and Ramsey are presented in this paper. The resulting geographic - a forward-backward parabolic partial differential equation (PDE) over bounded spatial domain is governed by two main driving forces: friction reallocation physical capital, arbitrage savings. solution, starting from an unequal distribution displays convergence time to spatially homogeneous balanced path with positive rates. potentially contains both diffusive agglomerative forces. If there no forces, solution homogenous steady state, but if force exists, increasing concentration capital time. This shows that aggregate can be consistent different profiles locations. An additional contribution paper develop distributive comparative dynamics analysis for heterogeneous productivity shock. It shown that, although redistribution consumption across locations, technological inequality persistent.