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Forward looking dynamics in spatial CGE modelling

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  • Bröcker, Johannes
  • Korzhenevych, Artem

Abstract

This 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.

Suggested Citation

  • Bröcker, Johannes & Korzhenevych, Artem, 2013. "Forward looking dynamics in spatial CGE modelling," Economic Modelling, Elsevier, vol. 31(C), pages 389-400.
  • Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:389-400
    DOI: 10.1016/j.econmod.2012.11.031
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    Citations

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    Cited by:

    1. Olga Ivanova & d'Artis Kancs & Dirk Stelder, 2009. "Modelling Inter-Regional Trade Flows: Data and Methodological Issues in Rhomolo," EERI Research Paper Series EERI RP 2009/31, Economics and Econometrics Research Institute (EERI), Brussels.
    2. Francesco Di Comite & D'Artis Kancs, 2015. "Macro-Economic Models for R&D and Innovation Policies - A Comparison of QUEST, RHOMOLO, GEM-E3 and NEMESIS," JRC Working Papers JRC94323, Joint Research Centre (Seville site).
    3. Elshennawy, Abeer & Robinson, Sherman & Willenbockel, Dirk, 2016. "Climate change and economic growth: An intertemporal general equilibrium analysis for Egypt," Economic Modelling, Elsevier, vol. 52(PB), pages 681-689.
    4. Attila Varga, 2017. "Place-based, Spatially Blind, or Both? Challenges in Estimating the Impacts of Modern Development Policies," International Regional Science Review, , vol. 40(1), pages 12-37, January.
    5. Chen, Zhenhua & Rose, Adam Z. & Prager, Fynnwin & Chatterjee, Samrat, 2017. "Economic consequences of aviation system disruptions: A reduced-form computable general equilibrium analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 207-226.
    6. Attila Varga & Péter Járosi & Tamás Sebestyén, 2011. "Modeling the growth effects of regional knowledge production: The GMR-Europe model and its applications for EU Framework Program policy impact simulations," ERSA conference papers ersa11p1426, European Regional Science Association.
    7. Attila Varga, 2014. "Challenges in modeling the impacts of modern development policies: The case of the GMR-approach," EcoMod2014 7151, EcoMod.
    8. Johannes Bröcker, 2012. "Wider economic benefits from communication cost reductions: an endogenous growth approach," ERSA conference papers ersa12p1165, European Regional Science Association.
    9. repec:elg:eechap:14395_2 is not listed on IDEAS

    More about this item

    Keywords

    Spatial dynamic CGE modeling; Multiple optimizing agents; Transport costs;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O41 - Economic Development, Innovation, 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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