Introducing Capital Friction to Spatial DSGE Model

(In Progress) I am working as an independent researcher advised by Professor Zhiwei Xu at Fudan University to conduct this research (Feb 2024 - ).

I try to incorporate capital frictions including liquidity constraints and monetary assets into landlord decisions and construct a DSGE model to examine the impact and impulse response to the spatial distribution of trade and migration. I try to construct the counterfactuals through dynamic exact hat algebra and decompose the impulse response process using the method of spectual analysis. This work is based on the dynamic spatial general equlibrium model developed by B. Kleinman, E. Liu and S. J. Redding (2023).