Kiel Working Papers, Kiel Institute for World Economics
No 1731:
Forward looking dynamics in spatial CGE modelling
Johannes Bröcker and Artem Korzhenevych
Abstract: 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
Keywords: spatial dynamic CGE modeling, multiple optimizing agents, transport costs; (follow links to similar papers)
JEL-Codes: Q54,; O33,; H87; (follow links to similar papers)
26 pages, September 2011
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