The Econometric Society is pleased to announce that the 2018 Frisch Medal selection committee of Torsten Persson, Dave Donaldson and Igal Hendel has awarded this year’s Frisch Medal of the Econometric Society to Gabriel Ahlfeldt, Stephen Redding, Daniel Sturm, and Nikolaus Wolf for their paper, "The Economics of Density: Evidence from the Berlin Wall”, (Econometrica, Vol. 83, No. 6, November 2015, 2127–2189)
First awarded in 1978, the Frisch Medal is presented biennially for the best applied (empirical or theoretical) paper published in Econometrica during the previous five years.The award will be presented by Econometric Society President, Tim Besley, on August 27, 2018 at the European Summer Econometric Society meeting in Cologne, Germany.
The committee wrote the following citation:
“The Economics of Density: Evidence from the Berlin Wall" by Gabriel Ahlfeldt, Stephen Redding, Daniel Sturm, and Nikolaus Wolf, breaks genuinely new ground in the modeling of cities and the spatial organization of economic activity. From the stepping stone of a long tradition in urban economics, the authors develop a theoretical model of an asymmetric city with a large number of “blocks” in which land developers offer floor space for production or residences, firms choose where to produce and whom to hire, and workers choose where to work and where to live. These city blocks differ, exogenously, in their innate productivity and residential amenities. But they can also, endogenously, become more attractive places to produce and reside through local-density externalities from other nearby firms and residents. Such agglomeration forces are the fundamental reasons for cities to exist, but measuring their strength has been a major stumbling block due to the very nature of endogenous agglomeration. To carry out their estimation, the authors compile unique block-level data from Berlin, going all the way back to the 1930s. They then estimate the strength of agglomeration externalities through a creative strategy, which relies on Berlin’s partition in 1961 and reunification in 1989 as sources of variation in the proximity of each West Berlin block to the local density of other blocks. The paper provides an outstanding example of how to credibly and transparently use a quasi-experimental approach to structurally estimate model parameters that can serve as critical inputs for counterfactual policy analyses."