Counterfactual analysis using a regional dynamic general equilibrium model with historical calibration

Federico Perali and Stefania Lovo

No 58/2009, Working Papers from University of Verona, Department of Economics

Abstract: This paper develops a regional dynamic general equilibrium model calibrated using two regional SAMs for the Italian region Valle D’Aosta for the years 1963 and 2002. A historical calibration procedure is performed over the 40 years period and a validation exercise ensures that the modelled tendencies closely approximate the actual observed growth patterns of the main regional macroeconomic variables. The dynamic general equilibrium model provides an original and powerful tool for historical counterfactual analysis not available using standard dynamic general equilibrium models. The model is used to compare the growth path followed by the region during the period of interest with different scenarios intended to rank the social desirability of alternative behaviours of the regional administration.

Keywords: historical calibration; historical validation; regional dynamic general equilibrium model; historical counterfactual analysis (search for similar items in EconPapers)
JEL-codes: C68 R13 (search for similar items in EconPapers)
Pages: 27
Date: 2009-09
New Economics Papers: this item is included in nep-cmp, nep-dge, nep-geo and nep-ure
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