Approximation Methods: An Application to the Core-Periphery Model

IGIER Working Paper Series No. 219

36 Pages Posted: 13 Sep 2002

See all articles by Marco Maffezzoli

Marco Maffezzoli

Bocconi University - Department of Economics

Federico Trionfetti

Université Paris XIII Nord - Faculty of Economic Sciences

Date Written: July 15, 2002

Abstract

A feature of new economic geography model is their mathematical intractability. This intractability results from the fact that the functional relationship between the indirect utility differential and the state variable cannot be found explicitly. We illustrate three methods that can be utilized to approximate the unknown function. These methods are simple and give a remarkable improvement in the precision of approximation with respect to the commonly utilized Lagrange approximation. Precision of approximation is important in models that feature catastrophic behavior. We apply these methods to the core-periphery model. Naturally, they can be applied to all cases of unknown functional relationships.

Keywords: projection methods, spatial models, economic geography

JEL Classification: R1, C63

Suggested Citation

Maffezzoli, Marco and Trionfetti, Federico, Approximation Methods: An Application to the Core-Periphery Model (July 15, 2002). IGIER Working Paper Series No. 219, Available at SSRN: https://ssrn.com/abstract=319121 or http://dx.doi.org/10.2139/ssrn.319121

Marco Maffezzoli (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Federico Trionfetti

Université Paris XIII Nord - Faculty of Economic Sciences ( email )

99, av. Jean-Baptiste Clement
Villetaneuse, F 93430
France

HOME PAGE: http://www.univ-paris13.fr/CEPN/federico.htm