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Why do Cities Matter?


We study how growth of cities determines the growth of nations. Using a spatial

equilibrium model and data on 220 US metropolitan areas from 1964 to 2009, we first estimate

the contribution of each U.S. city to national GDP growth. We show that the contribution of a

city to aggregate growth can differ significantly from what one might naively infer from the

growth of the city’s GDP. Despite some of the strongest rate of local growth, New York, San

Francisco and San Jose were only responsible for a small fraction of U.S. growth in this period.

By contrast, almost half of aggregate US growth was driven by growth of cities in the South.


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