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

Francesca Crucitti, Patrizio Lecca, Philippe Monfort () and Simone Salotti
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Philippe Monfort: European Commission - DG REGIO

No 2022-12, JRC Working Papers on Territorial Modelling and Analysis from Joint Research Centre

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.

Keywords: General equilibrium modelling; forward-looking behaviour; regional economics; cohesion policy. (search for similar items in EconPapers)
JEL-codes: C68 D58 R13 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2022-10
New Economics Papers: this item is included in nep-dge, nep-eec, nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:ipt:termod:202212

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