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Forward Looking and Myopic Regional Computable General Equilibrium Models. How Significant is the Distinction?

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  • Lecca, Patrizio
  • McGregor, Peter G.
  • Swales, Kim

Abstract

We present a stylized intertemporal forward-looking model able that accommodates key regional economic features, an area where the literature is not well developed. The main difference, from the standard applications, is the role of saving and its implication for the balance of payments. Though maintaining dynamic forward-looking behaviour for agents, the rate of private saving is exogenously determined and so no neoclassical financial adjustment is needed. Also, we focus on the similarities and the differences between myopic and forward-looking models, highlighting the divergences among the main adjustment equations and the resulting simulation outcomes.

Suggested Citation

  • Lecca, Patrizio & McGregor, Peter G. & Swales, Kim, 2012. "Forward Looking and Myopic Regional Computable General Equilibrium Models. How Significant is the Distinction?," SIRE Discussion Papers 2012-62, Scottish Institute for Research in Economics (SIRE).
    • Handle: RePEc:edn:sirdps:367
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    More about this item

    Keywords

    Myopic and Forward-looking Behaviour; Computable General Equilibrium Models; Regional Adjustment;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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