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Macroeconomic Modelling of R&D and Innovation Policies

Francesco Di Comite, d'Artis Kancs and Wouter Torfs ()

No JRC89558, JRC Working Papers from Joint Research Centre (Seville site)

Abstract: This paper presents and applies a dynamic spatial computable general equilibrium model - RHOMOLO - to assess the impact of research, technological development and innovation policies in the EU. RHOMOLO is parameterised by econometrically estimating the relationship between regional productivity and R\&D intensity by applying a technology catch-up model to the EU regional context. Our simulation results suggest that a dynamic spatial computable general equilibrium approach is particularly useful for handling spillovers of investments in the innovation capacity of the regions, both of which cannot be captured by models in which the spatial structure is not present. The paper shows the strengths and limitations of the approach, and the advantages of aligning the spatially and sectorally disaggregated models with more aggregated dynamic macro models.

Keywords: R&D; innovation policy; macroeconomic modelling; dynamic spatial general equilibrium; RHOMOLO; QUEST. (search for similar items in EconPapers)
JEL-codes: C68 D24 D58 H50 O31 O32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp and nep-ino
Date: 2015-07
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Working Paper: Macro-Economic Models for R&D and Innovation Policies - A Comparison of QUEST, RHOMOLO, GEM-E3 and NEMESIS (2015) Downloads
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