Carmen Camacho

On the dynamics of capital accumulation across space

We solve an optimal growth model in continuous space, continuous and bounded time. The optimizer chooses the optimal trajectories of capital and consumption across space and time by maximizing an objective function with both space and time discounting. We extract the corresponding Pontryagin conditions and prove their sufficiency. We end up with a system of two parabolic differential equations with the corresponding boundary conditions. Then, we study the roles of initial capital and technology distributions over space in various scenarios.

Carbon capture and storage and transboundary pollution: A differential game approach

We study the strategic behavior of two countries facing transboundary CO2 pollution under a differential game setting. In our model, the reduction of CO2 concentration occurs through the carbon capture and storage process, rather than through the adoption of cleaner technologies. Furthermore, we first provide the explicit short-run dynamics for this dynamic game with symmetric open-loop and a special Markovian Nash strategy. Then, we compare these strategies at the games’ steady states and along some balanced growth paths. Our results show that if the initial level of CO2 is relatively high, state dependent emissions reductions can lead to higher overall environmental quality, hence, feedback strategy leads to less social waste.

Migration modelling in the New Economic Geography

It is our aim to study some of the migration laws utilized in Economic Geography, their dynamic properties and how their long-run predictions and stability change with the specificities of the economic models under consideration. After a thorough description of Fujita and Thisse (2002), we introduce a different migration law a la Krugman (1991a). Although individuals do not foresee price changes, the steady state outcome does not vary qualitatively: the unique steady state is a symmetric distribution of skilled labour across regions. We can prove that this interior steady state is asymptotically stable, which represents a net improvement in the dynamic analysis of the long run with respect to Fujita and Thisse. When we model the economy using the Romer (1990) model applied to two regions and allowing for inter-regional skilled migration, then there exists a solution path that converges to an asymmetric steady state. In effect, the new steady state depends on technology, fixed costs, knowledge spillovers and transportation costs.