Regional Economic Modelling Newsletter

This Newsletter provides an update on recent events, policy contributions, and publications related to the RHOMOLO model.

In the final year of the Juncker Commission, we are proud to report that the results of the RHOMOLO-EIB analysis carried out by the Regional Economic Modelling (REMO) team together with the European Investment Bank Group were mentioned by President Juncker in his last statement at the European Parliament on October 22^nd.

A RHOMOLO analysis done in collaboration with JRC colleagues working with the FIDELIO model and with DG GROW was also featured in the Single Market Performance Report 2019 published on December 17^th.

The VII Regional Economic Modelling workshop took place at the end of October in Barcelona and was co-organised by the REMO team together with the Regional Quantitative Analysis Group (AQR) of the University of Barcelona.

During this last semester the REMO team has also started collaborating with more national institutions such as IRPET and SVIMEZ in Italy, and it looks forward to continuing its activities both to support policy-making and to keep on making of RHOMOLO a relevant scientific modelling framework.

The RHOMOLO webtool is available here.

Andrea Conte of the REMO team presented the RHOMOLO model in a meeting hosted by the EPRS with the US Congressional Budget Office (CBO), the Government Accountability Office (GAO), and the Office of Information and Regulatory Affairs (OIRA).

The VII Regional Modelling workshop co-organised with the AQR Research Group of the University of Barcelona brought together researchers from all over Europe to discuss themes related to modelling and regional and territorial analysis.

The workshop was organised in six sessions dealing with economic growth, economic and fiscal policy, trade, and institutions. Two keynote speeches were provided by Alexander Lembcke (OECD) and Marco Vivarelli (MAE, Catholic University, UNU-MERIT, IZA, GLO).

The papers presented at the workshop are available for download here.

The EWRC is an annual four-day event during which cities and regions showcase their capacity to create growth and jobs, implement EU cohesion policy, and prove the importance of the local and regional level for good European governance.

Jorge Díaz Lanchas, Olga Diukanova, and Stylianos Sakkas of the REMO team organised the following three special sessions: "The regional dimension of global production chains in the EU market", "Fiscal decentralisation, transparency, and involving citizens in decision-making", and "Territorial analysis of labour markets, social inclusion and human capital policy". It has been an occasion to discuss regional trade and global value chains, fiscal decentralisation, and the modelling of labour market and human capital policy.

During the congress entitled: “Cities, regions and digital transformations: Opportunities, risks and challenges” there have been discussions on a variety of themes in spatial, regional, and urban economics, economic geography, and regional policy. With approximately 800 participants from all continents, the ERSA congress is one of the largest academic conferences in regional science worldwide.

Jorge Díaz Lanchas and Olga Diukanova of the REMO team organised the special sessions "The geography of discontent: Explanations and policies" and "Fiscal decentralisation and multi-level governance". The congress has been an occasion to present the ongoing work on public opinion and perceptions and on multi-level governance in the RHOMOLO model.

The RHOMOLO model has been used to carry out a number of sector-specific simulations related to the assessment of the performance of the EU Single Market (see European Commission, Single Market Performance Report, SWD(2019) 444 final, Brussels, 17.12.2019). This marked a collaboration with JRC colleagues working with the FIDELIO model as well as with colleagues at DG GROW.

The results of the analysis are summed up in a Policy Insight that can be found here.

The EFSI is the central pillar of the Investment Plan for Europe and it was launched jointly by the European Investment Bank Group and the European Commission. President Juncker stated that the EFSI has created more than 1 million jobs (1.7 million by 2022), with a positive contribution to EU GDP of +0.9% (+1.8% by 2022).

A Policy Insight with more details on the RHOMOLO-EIB analysis whose results have been mentioned by President Juncker can be found here.

The analysis shows the potential macroeconomic impact of a barriers reduction in regulated business services sectors and construction. Simulations made with the RHOMOLO and FIDELIO models suggest that price reductions in these relatively small sectors may have sizeable GDP and employment effects in the EU.

Coal accounts for nearly a quarter of the total electricity production in the EU and provides jobs to about 240,000 people in mines and power plants. The European Commission is working to ensure a smooth transition to cleaner forms of energy production to meet the commitment to reduce CO2 emissions by at least 40% by 2030.

The RHOMOLO-IO estimates presented in this Policy Insight suggest that 215,000 additional jobs can be potentially affected by the shift away from coal towards a low-carbon economy, with significant regional differences across Europe.

Some RHOMOLO results (with a specific focus on Polish regions) of the simulations on the ex-ante impact assessment of the 2014–2020 European Regional and Development Fund and Cohesion Fund are featured in the third chapter of the book edited by J. Pokorski, J. Szut, T. Wyszyńska, Z. Mogiła, and J. Zaleski entitled The Use of Econometric Modelling in Evaluating the Impact of Public Policies and Programmes, PARP, Warsaw, 2019.

The English version of the book can be found here.

The EFSI is the central pillar of the Investment Plan for Europe and it was launched jointly by the European Investment Bank Group and the European Commission.

According to the results reported in this Policy Insight, the EFSI has created more than 1 million jobs (1.7 million by 2022), with a positive contribution to EU GDP of +0.9% (+1.8% by 2022).

The Grand Paris Express aims at modernising the existent transport network in the Île-de-France and its investments are estimated at €28 billion for the period 2010-2037.

Based on the assumption of a combined 1% increase in labour productivity due to better matching between skill supply and demand and a 1% increase in accessibility achieved with the completion of the project, the RHOMOLO simulations suggest an overall medium-term positive GDP impact for the EU as a whole (0.18%), for France (0.79%) and for Île-de-France (2.61%).

The full Technical Report can be found here.

Fiscal and governance decentralization can impact local firm dynamics in various ways. This Report uses Spanish data to assess the probability that cities either diversify or specialize over time over the period 1995-2007.

The results suggest that there is a high probability that a city will diversify if it is the capital of a regional government or located in a relatively decentralized region, while the opposite is true for the probability that a city will specialize. This suggests that the link between decentralization and specialization patterns in the urban system deserves more attention in the literature on decentralization, economic growth, and regional disparities.

The full Technical Report can be found here.

The so-called Input-Output model can be used for a variety of economic studies, such as analyses of output and employment multipliers, of consumption redistribution, and of trade.

This Report shows how the RHOMOLO-IO framework, by making use of the data underlying the RHOMOLO model, has been used to carry out stand-alone analyses on, among other things, R&D and low-carbon investments, the TEN-T projects, and regional trade.

The full Technical Report can be found here.

Economic complexity indicators provide a better understanding of the long-term determinants of countries’ economic growth. This Report explores the intra-national spatial heterogeneity using within-country trade flows data for Spain.

The international and intra-national economic complexity indicators calculated for the NUTS-3 provinces of Spain from 1995 to 2016 suggest that regions differ in complexity not only over time but also with regards to their international and intra-national trade exposures.

The full Technical Report can be found here.

The Transatlantic Trade and Investment Partnership (TTIP) generated an unprecedented debate across Europe. The analysis on EU citizens' preferences contained in this Report suggests that support for free trade and support for the TTIP have similar, but not identical foundations.

Inconsistent preferences are rooted in individual values, EU attitudes, and political cues, as well as treaty partner heuristics.

The full Technical Report can be found here.