Spatial Dynamics

We examine the recent literature that studies the spatial distribution of economic activity across both space and time. We discuss the methodological advances enabling the incorporation of dynamic forces of economic activity—such as endogenous innovation, forward-looking location choices, capital and asset accumulation, idea diffusion, and stochastic fundamentals—into frameworks with many heterogeneous locations and a rich economic geography. These frameworks remain tractable for quantitative evaluations. We also discuss the wide range of empirical questions explored in recent work through the lens of these frameworks, including the global and local economic impacts of climate change, the dynamic effects of trade and migration policy, labor market adjustments to import competition, the spatial consequences of structural change, the dynamic effects of place-based policies, and the long-run spatial effects of large-scale infrastructure projects.