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Regional CGES


The regional CGEs had been developed in the CAPRI-RD project. There is one independent model for each European country, dis-aggreggated to NUTS 2 administrative regions, covering all economic activities broken down to 11 sectors: Agriculture, Forestry, Other primary production, Food processing, Other manufacturing, Energy products, Construction, Trade and transport, Hotels and restaurants, Education and Other services.

Production is modelled by a CES function which substitutes between the value aggregate (labor, land, capital) and intermediates. Labor, land, capital use decisions are again depicted by a CES function, as is the overall shares of imported, regionally or domestically produced intermediates, whereas overall composition of intermediate demand from sectors is fixed. A CET function distributes regional suply to the regional, domestic or international market.

Different market representations are possible for primary factors. They might be fixed them at sector level or rendered fully mobile. In the case of labor, the unemployment rate can be endogenized based on the wage curve concept. Imperfect factor mobility for capital can be based on the DPSV investment rule which renders the overall capital stock endogenous.

Final demand is depicted with a Linear Expenditure System. The model comprises optionally a net migration function which let population size react to changes in the unemployment rate and regional capita income compared to national averages. The net migarion function render also regional labor demand endogenous. The Armington assumption drives the composition of final demnad from the regional or domestic market and imports.

The state is broken down to national and reigonal budgets, and be closed either via savings (resp. fresh debt) or by adjusting income tax rates.

Majoral structural elements of the model can also be found in the REGFIN modelling system.

Further reading:

Policy presentation

The CGEs comprise a module which maps the measures from the second Pillar of the CAP into shocks for the regional CGEs.

Technical realisation

As the rest of the CAPRI modelling system, the regional CGEs are realised in GAMS and solved with the non-linear solver CONOPT developed by Arne Drud. A very simiar version of the models is also available in GEMPACK. Several GAMS processes are spawned in parallel to solve the regional CGEs. The models can also be used independently from the other CAPRI modules.

Additonal material

The following set of slides had been produced for a training session at JRC-IPTS

Last modified:: 2022/11/07 10:23
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