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Title:Evidence and implications of Zipf's aw for integrated economies PDF Logo
Authors:Bowen, Harry P.
Munandar, Haris
Viaene, Jean-Marie
Issue Date:2006
Series/Report no.:CESifo working paper 1743
Abstract:This paper considers the distribution of output and productive factors among members of a fully integrated economy (FIE). We demonstrate that each member’s shares of total output and of total factors will be equal. This implies that growth in shares is random. If output and factor shares evolve as reflective geometric Brownian motion, then limiting distribution of these shares will exhibit Zipf’s law. Our empirics support Zipf’s law for U.S. states and for E.U. countries. These findings imply that models characterizing growth of members within an FIE should embody a key assumption: growth process of shares is random and homogeneous.
JEL:E13
F15
F21
F22
O57
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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