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Forward looking dynamics in spatial CGE modelling

  • Johannes Bröcker
  • Artem Korzhenevych

This paper sets up a multiregional dynamic framework by combining the optimal savings model with investment adjustment costs and the spatially disaggregated 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. 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 taylor-made solution algorithm. The functionality is demonstrated using two illustrative examples

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1731.

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Length: 26 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:kie:kieliw:1731
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  8. Tavasszy, L.A. & Thissen, M.J.P.M. & Oosterhaven, J., 2011. "Challenges in the application of spatial computable general equilibrium models for transport appraisal," Research in Transportation Economics, Elsevier, vol. 31(1), pages 12-18.
  9. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
  10. Devarajan, Shantayanan & Go, Delfin S., 1998. "The Simplest Dynamic General-Equilibrium Model of an Open Economy," Journal of Policy Modeling, Elsevier, vol. 20(6), pages 677-714, December.
  11. Bröcker, Johannes & Korzhenevych, Artem & Schürmann, Carsten, 2010. "Assessing spatial equity and efficiency impacts of transport infrastructure projects," Transportation Research Part B: Methodological, Elsevier, vol. 44(7), pages 795-811, August.
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  18. Lau, Morten I. & Pahlke, Andreas & Rutherford, Thomas F., 2002. "Approximating infinite-horizon models in a complementarity format: A primer in dynamic general equilibrium analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 26(4), pages 577-609, April.
  19. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
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