Theoretical explorations in economic growth and transportation
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Abstract
This dissertation is in two parts. In the first part, a two-region endogenous growth
model is developed illustrating how a knowledge rich economy may exhibit increasing
returns to scale and grow perpetually while the economy of the knowledge-poor region
that is dependent predominantly on physical capital may fall into a low-level equilibrium
trap and stagnate. The conditions for the development of knowledge sector in the 'poor'
economy are analyzed. These conditions include a threshold level of social and economic
infrastructure or 'social capital' that allows the aggregate economy to internalize the
positive external effects of the accumulation of knowledge-capital. A fully specified
endogenous growth model for the knowledge economy is developed in a dynamic general
equilibrium framework. It shows the possibility of divergence of growth rates of different
economies and conditions under which they may exhibit non-steady state growth.
In the second part of the dissertation a general equilibrium model of transportation
1s developed characterizing transportation as a good providing direct utility to
households. It introduces a notion of an accessibility-weighted stock of infrastructure,
which provides a convenient tool for integrated transportation-land use modeling. The equilibrium level of infrastructure and the lump sum tax rate that could finance it are
derived. The planning equilibrium and the decentralized equilibrium are shown to be
equivalent under certain conditions. The model generates results such as agglomeration
economies, income-elastic urban sprawl, efficiency of maintenance investment, demand
management of congestion, duality between optimal land use and efficient transportation
system, and optimality in integrating land use and transportation in urban planning.
This general equilibrium model for the closed economy is extended to
accommodate trade among regions and increasing returns to scale technology in the
aggregate non-transportation sector of the economy. The revised model captures the selfreinforcing
effect of transportation on the overall scale economies and the
complementarities among trade, transportation, and productivity of the economy.
The theoretical explorations on growth theory and transportation highlight the
importance of a mitigating policy environment for the sustained growth and development
of an economy.
Description
2001
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This work is being made available in OpenBU by permission of its author, and is available for research purposes only. All rights are reserved to the author.