We present a multi-regional endogenous growth model in which forward-looking agents choose their regions to live in, in addition to consumption and capital accumulation paths. The spatial distribution of economic activity is determined by the interplay between production spillover effects and urban congestion effects. We characterize the global stability of the spatial equilibrium states in terms of economic primitives such as agents' time preference and intra- and inter-regional spillovers. We also study how macroeconomic variables at the stable equilibrium state behave according to the structure of the spillover network. Journal of Economic Literature Classification Numbers: C62; C73; D62; O41; R13.

Key Words: Growth; Agglomeration; Continuous-time overlapping generations; Perfect foresight dynamics; Potential function; Spillover network.

Macroeconomic Dynamics 27 (2023), 224-249. PDF file