A RHOMOLO analysis on the determinants of the spatial distribution of economic activity
![](https://ec.europa.eu/newsroom/repository/picture/2018-48/article_dicomite_kancs_lecca_38826.jpg)
date: 22/11/2018
permalink: Main URL
author: Francesco Di Comite (DG ECFIN), D'Artis Kancs (JRC Bruxelles), and Patrizio Lecca (JRC Seville)
RHOMOLO has been used by Patrizio Lecca, Francesco Di Comite, and D'Artis Kancs to study the role played by capital mobility, labor migration and input–output linkages in shaping the spatial distribution of economic activity.
The analysis entailed the identification of European Union core and periphery regions based on an accessibility index and the simulation of the impact of a homogeneous transport shock. The RHOMOLO results suggest that agglomeration patterns are magnified by labor and capital mobility, the latter exerting a stronger influence than the former. Results are more nuanced for vertical linkages, which are associated with more agglomeration in terms of GDP, but more dispersion in terms of number of firms and labor demand.
These results shed additional light on location mechanisms in applied general equilibrium applications of the new economic geography (NEG) theory and complement the theoretical NEG literature based on analytically solvable models.