Business Cycles: Continuous Space

Abstract

In economics there has been very scant modelling by means of partial differential equations. In business cycle modelling they, however, arise in a natural way if we put the problem studied in a spatial setting by introducing interregional trade, considering a dynamical process that evolves both in continuous space and time. This will be done in the simplest and most obvious way, i.e., by a linear import-export multiplier, as is in line with the multiplier for local expenditures already present and with the general Keynesian macroeconomic outlook.