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We study the effect of spatial inequality on economic activity. Given that the relationship is highly simultaneous in nature, we use exogenous variation in geographic features to construct an instrument for spatial inequality, which is independent from any man-made factors. Inequality measures...
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affects the spatial distribution of economic activity, trade, migration, growth, and welfare. We assess quantitatively the … impact of migration and trade restrictions, energy taxes, and innovation subsidies. … firms locate on a hemisphere. Trade across locations is costly, firms innovate, and technology diffuses over space. Energy …
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