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RHOMOLO: A Dynamic General Equilibrium Modelling Approach to the Evaluation of the EU's Regional Policies

The paper presents a new dynamic general equilibrium framework (RHOMOLO), which is being developed at the European Commission for the impact assessment of the EU Cohesion Policy (ECP). RHOMOLO is constructed using the Dynamic Spatial Computable General Equilibrium (DSCGE) framework and combines features of New Economic Geography and Endogenous Growth theory. It is the first EU-wide model with a detailed regional (NUTS-2) and sectoral (2-digit NACE) resolution. The present paper presents the RHOMOLO model and discusses its potential for the ECP evaluation. Keywords: Economic Modelling, EU Cohesion Policy, regional development; economic geography. JEL classification: F1, O1, R3, R4.