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The RHOMOLO model

RHOMOLO is the spatial computable general equilibrium model of the European Commission focusing on EU regions. It has been developed and maintained by the Regional Economic Modelling team at the Joint Research Centre (JRC) in Seville in cooperation with Directorate-General for Regional and Urban Policy (DG REGIO). It is used for policy impact assessment and provides sector-, region- and time-specific simulations to support the EU policy on investments as well as reforms covering a wide array of objectives.

RHOMOLO (V3 - here's the Technical Report with the latest mathemathical presentation of the model) covers all the EU NUTS 2 regions, disaggregating their economies into ten NACE rev.2 sectors, with a constant effort on data updating and maintenance. All the monetary transactions in the economy are included in the model as a result of agents making optimising decision. Goods and services are consumed by households, governments, and firms, and are produced in markets that can be either perfectly or imperfectly competitive. Spatial interactions between regions are captured through costly trade matrices of goods and services and factor mobility through migration and investments. This makes RHOMOLO particularly well-suited for analysing policies related to investments in human capital, transport infrastructure, and innovation.

RHOMOLO is being used extensively for impact assessments of the European Structural and Investment Funds such as the ERDF and the ESF, and it is used together with the European Investment Bank (EIB) for the evaluation of the macroeconomic impact of the EIB group (here's the first study on it published in July 2018). Starting from 2018, the analyses carried out by the Regional Economic Modelling team are published in the JRC Working Paper series on Territorial Modelling

A web tool has been developed which allows users to execute a set of policy experiments using a simplified version of the model.