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Capital mobility and spillovers within a modular approach to multi-region modeling

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  • Leimbach, Marian
  • Edenhofer, Ottmar

Abstract

This paper presents a novel approach to multi-region modeling. This approach is capable to reproduce the results from the traditional Negishi approach. In contrast to the latter, however, it also allows to model technological spillovers induced by foreign direct investments. The way of finding an equilibrium solution in a multiregional dynamic framework differs from existing methods. However, it resembles the solution method applied to the Arrow-Debreu type computable general equilibrium models in using an imaginary auctioneer who balances the interactions of the decentralized agents. We discuss the characteristics of the underlying tatonnement process which, in contrast to the joint maximization with the Negishi approach, is numerically implemented as decentralized optimization. Results from numerical model experiments are presented for cases with and without spillovers. According to preliminary results, it turns out that there are only small positive feedbacks from technological spillovers to the foreign direct investors (technological forerunners).

Suggested Citation

  • Leimbach, Marian & Edenhofer, Ottmar, 2005. "Capital mobility and spillovers within a modular approach to multi-region modeling," Conference papers 331342, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331342
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    More about this item

    Keywords

    Research Methods/ Statistical Methods; Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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