Capital mobility and spillovers within a modular approach to multi-region modeling

Marian Leimbach and Ottmar Edenhofer

No 331342, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: This paper presents a novel approach to multi-region modeling. This approach is capable to reproduce the results from the traditional Negishi approach. In contrast to the latter, however, it also allows to model technological spillovers induced by foreign direct investments. The way of finding an equilibrium solution in a multiregional dynamic framework differs from existing methods. However, it resembles the solution method applied to the Arrow-Debreu type computable general equilibrium models in using an imaginary auctioneer who balances the interactions of the decentralized agents. We discuss the characteristics of the underlying tatonnement process which, in contrast to the joint maximization with the Negishi approach, is numerically implemented as decentralized optimization. Results from numerical model experiments are presented for cases with and without spillovers. According to preliminary results, it turns out that there are only small positive feedbacks from technological spillovers to the foreign direct investors (technological forerunners).

Keywords: Research Methods/ Statistical Methods; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 33
Date: 2005
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Related works:
Working Paper: Capital Mobility and spillovers within a modular approach to multiregion modeling (2005)
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