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Regional general equilibrium modelling with forward-looking agents: an application to the 2014-2020 European structural regional investments

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Abstract

We investigate the effects of the 2014-20 European structural funds with a general equilibrium model calibrated on the NUTS 1 regions of the EU. We assume forward-looking agents to account for expectations and long-lasting effects of the policy. The almost €260 billion of investments lead the European GDP to be 0.3% higher in 2022 than it would be in the absence of the policy. Interestingly, this effect is lower than what a model with myopic agents would suggest. The regional distribution of the differences in the GDP impacts between the two settings indicates that the largest deviations are recorded for the net recipient regions, with interesting implications regarding the policy credibility, the nature of the interventions and their duration.

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  • Francesca Crucitti & Patrizio Lecca & Philippe Monfort & Simone Salotti, 2022. "Regional general equilibrium modelling with forward-looking agents: an application to the 2014-2020 European structural regional investments," JRC Working Papers on Territorial Modelling and Analysis 2022-12, Joint Research Centre.
    • Handle: RePEc:ipt:termod:202212
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC130196
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    Keywords

    General equilibrium modelling; forward-looking behaviour; regional economics; cohesion policy.;
    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
    • 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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