The spatial (interprovincial) computable general equilibrium model for Morocco: theoretical specification and current developments

Mahmoud Arbouch and Eduardo Amaral Haddad

No 2525, Research papers & Policy papers on Economic Trends and Policies from Policy Center for the New South

Abstract: This paper presents the theoretical specification and current developments of a Spatial (Interprovincial) Computable General Equilibrium (SCGE) model for Morocco. The model is formulated as a Johansen-type CGE system, solved in linearized form, and is designed to analyze the regional and national impacts of policy shocks within an integrated interregional economic framework. The Moroccan economy is disaggregated into 72 provinces, 20 production sectors, multiple institutional agents, and an external sector, allowing for detailed representation of interprovincial trade, production linkages, and income generation. Production technologies combine nested CES and Leontief structures, capturing substitution possibilities among regional and foreign sources of intermediate inputs and primary factors, while household behavior follows a Stone-Geary (Linear Expenditure System) specification. The model incorporates explicit treatments of investment allocation, capital accumulation, labor markets, migration, government behavior, and price formation under constant returns to scale, with extensions to allow for agglomeration economies. Calibration is based on a top- down disaggregation of the national input-output system for 2019, complemented by demographic and fiscal data, and parameterized using a combination of econometric estimates and standard values from the literature. In addition, the paper introduces a CO₂-emissions module that enables the simulation of carbon taxation policies and interregional revenue recycling schemes. The SCGE model provides a flexible and internally consistent tool for evaluating the regional distributional, environmental, and macroeconomic effects of structural reforms and climate-related policies in Morocco.

Date: 2025-12
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