Quantitative Regional Economics

This handbook chapter presents the major advances made in the field of economic geography over the past decade. It starts by documenting a number of motivating empirical facts. It then shows how a quantitative regional model that combines the insights from two seminal models from an earlier generation can explain these facts. It then presents a unified quantitative framework that incorporates this and many other economic geography models. This unified framework is sufficiently tractable to characterize its equilibrium properties while flexible enough to be combined with detailed spatial economic data to estimate the model parameters, conduct counterfactuals, and perform welfare analysis. The chapter concludes by discussing many extensions of the framework, some of which have already been explored and others which have not.