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Regional Policy Spillovers: The National Impact of Demand-Side Policy in an Interregional Model of the UK Economy

  • Michelle Gilmartin

    ()

    (Fraser of Allander Institute, University of Strathclyde)

  • David Learmonth

    (Fraser of Allander Institute, University of Strathclyde)

  • Peter McGregor

    ()

    (Department of Economics, University of Strathclyde)

  • Kim Swales

    ()

    (Department of Economics, University of Strathclyde)

  • Karen Turner

    ()

    (Stirling Management School, Division of Economics)

UK regional policy has been advocated as a means of reducing regional disparities and stimulating national growth. However, there is limited understanding of the interregional and national effects of such a policy. This paper uses an interregional computable general equilibrium model to identify the national impact of a policy-induced regional demand shock under alternative labour market closures. Our simulation results suggest that regional policy operating solely on the demand side has significant national impacts. Furthermore, the effects on the non-target region are particularly sensitive to the treatment of the regional labour market.

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Paper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 1128.

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Length: 58 pages
Date of creation: Jul 2011
Date of revision:
Publication status: Published
Handle: RePEc:str:wpaper:1128
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