Forward looking dynamics in spatial CGE modelling
AbstractThis paper sets up a spatial dynamic CGE framework by combining the optimal growth model of saving and investment under adjustment costs and the spatial CGE model with Dixit–Stiglitz structure in the modern sector. Because of increasing product diversity on the dynamic equilibrium path, the model belongs to the category of semi-endogenous growth models. We overcome the difficulty of existing multiregional models to correctly approximate the infinite horizon equilibrium by employing a theoretically consistent terminal condition. The distinction of goods, factors, firms, and households by location, and the incorporation of trade costs in the model allow to study a variety of issues in regional and transport economics. We describe the model calibration and a tailor-made solution algorithm. The functionality is demonstrated using two illustrative examples.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 31 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/inca/30411
Spatial dynamic CGE modeling; Multiple optimizing agents; Transport costs;
Other versions of this item:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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