We study net capital flows between U.S. states. We present a simple neoclassical model in which total factor productivity (TFP) varies across states and over time and where capital freely moves across state borders. In this framework capital flows to states that experience a relative increase in...

The United States in the 1950s and 1960s was characterized by strong "catch-up growth" in the south with capital owing from rich northern states to poorer southern states consistent with the predictions of the simple neoclassical model. After the 1970s, "catch-up growth" is mainly over in the...