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Counterfactual analysis using a regional dynamic general equilibrium model with historical calibration

Author

Listed:
  • Federico Perali

    () (Department of Economics (University of Verona))

  • Stefania Lovo

    () (Department of Economics (University of Verona))

Abstract

This paper develops a regional dynamic general equilibrium model calibrated using two regional SAMs for the Italian region Valle D’Aosta for the years 1963 and 2002. A historical calibration procedure is performed over the 40 years period and a validation exercise ensures that the modelled tendencies closely approximate the actual observed growth patterns of the main regional macroeconomic variables. The dynamic general equilibrium model provides an original and powerful tool for historical counterfactual analysis not available using standard dynamic general equilibrium models. The model is used to compare the growth path followed by the region during the period of interest with different scenarios intended to rank the social desirability of alternative behaviours of the regional administration.

Suggested Citation

  • Federico Perali & Stefania Lovo, 2009. "Counterfactual analysis using a regional dynamic general equilibrium model with historical calibration," Working Papers 58/2009, University of Verona, Department of Economics.
  • Handle: RePEc:ver:wpaper:58/2009
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    References listed on IDEAS

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    1. R. Pala & E. Marrocu & R. Paci, 2000. "Estimation of total factor productivity for regions and sectors in Italy. A panel cointegration approach," Working Paper CRENoS 200016, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
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    7. Kleijnen, J.P.C., 1999. "Validation of models : Statistical techniques and data availability," Other publications TiSEM f2238bd9-e4c9-430a-96f2-a, Tilburg University, School of Economics and Management.
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    More about this item

    Keywords

    historical calibration; historical validation; regional dynamic general equilibrium model; historical counterfactual analysis;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable 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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