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Gibrat’s law, Zipf’s law and Cointegration

Lalanne, Aurélie and Zumpe, Martin (2015): Gibrat’s law, Zipf’s law and Cointegration.

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Abstract

This paper examines the methods to detect the nature of the urban growth processes. It seems that cointegration testing enables to disentangle two versions of Gibrat’s law: a first one with growth shocks that are iid across time and cities (implying convergence of the city-size distribution towards Zipf’s law), and an alternative one with growth shocks that are only iid over time (implying conservation of the initial structure of the city size distribution).

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