Transcript 10.Macromodel_Attila_Varga

Economic impact evaluation challenges posed
by the new European Union Cohesion policy:
The case of the GMR-approach
Attila Varga
University of Pécs, Hungary
Outline
• Introduction
• The New Cohesion Policy and economic
impact evaluation challenges
• The GMR approach
• Policy simulations
• Conclusions
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Introduction
• Project level vs. economic evaluation – the
need for economic models
• Cohesion Policy: regional development vs.
monetary transfers
• Smart growth, inclusive growth, sustainable
growth
• Place-based approach: Smart specialization
• Challenges for economic impact evaluation
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Challenges in economic impact
evaluation
• Place-based approach to economic
development
– “smart specialization”
• In target: place-specific industrial comparative
advantages
• integrated policy instruments (human capital, R&D,
entrepreneurship)
• multi-level governance
• Participation (industry, universities, local organizations)
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Challenges in economic impact
evaluation
• Regional features determining the growth effects
of development policies:
– Local specificities (industrial structure, research
specialization, factor endowment)
– Cumulative agglomeration effects
– Additional impacts (Keynesian demand effects,
intersectoral linkages)
– Interrregional impacts (spillovers, trade, migration)
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Challenges in economic impact
evaluation
• The macroeconomic dimension: selection of
projects/regions – on what basis?
– Same budget – diff results: depending on the
instrumental distribution (ref. to the first simulation)
– Same budget – diff results: depending on the regional
distribution (ref. to the second simulation)
Need for macro level representation (costs/benefits,
macroeconomic framework conditions)
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Challenges in economic impact
evaluation
• Representation of both:
– Macroeconomic dimension: costs and benefits
– Regional dimension: local specificities affecting
policy needs and policy effectiveness
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Challenges in economic impact
evaluation
• Search for new impact modeling approaches:
– MASST (Capello-Fratesi 2013)
– GMR-type models
• GMR-Hungary, GMR-Europe (Varga et al. 2010, 2013)
• RHOMOLO (Brandsma et al. 2012)
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The GMR
(Geographic Macro and Regional)
impact modeling approach
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The GMR approach:
Model versions and applications
• Antecedents and model versions:
– Links to theory: Acs-Varga 2002
– Empirical modeling framework (Varga 2006)
– The EcoRet model (Schalk, Varga 2004, Varga, Schalk 2004)
– GMR-Hungary: (Varga, Schalk, Koike, Járosi,Tavasszy 2008)
– GMR-EU (Varga, Járosi, Sebestyén 2011; Varga,Törma 2011)
– GMR-HUNGARY II (Varga, Járosi, Sebestyén, 2013)
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The GMR approach:
Model versions and applications
• Applications:
– Cohesion Policy impact studies for the
Hungarian government (2003- )
– Cohesion Policy impact studies for the
European Commission (DG Regio - 2011)
– FP6 impact study (2010)
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• The GMR- Europe model (163 EU NUTS 2
regions and the EU level) includes:
– a regional Knowledge Production Function
(KPF) sub-model (163 NUTS 2 regions)
– a regional Spatial Computable General
Equilibrium (SCGE) sub-model (163 NUTS 2
regions)
– a macro (EU level) Dynamic Stochastic
General Equilibrium (DSGE) sub-model
(Quest III)
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!!!
Policy
Spatiotemporal dynamics
Impacts
MACRO block
Changes in aggregate
K and L
DTFPN,t
Regional SCGE block
Spatial equilibrium with
given KN and LN
DLi,t
!
R&D, human
capital, physical
accessibility
Macroeconomic
(TFP, K, L, Y, inflation,
wages, etc.)
DKN,t DLN,t
Regional
(TFP, K, L, wages, prices)
DTFPi,t
Regional TFP block
Policy-induced changes
in TFP
!
Figure 2: Regional and macro impacts of regionally implemented innovation policies
in the GMR-Europe model
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0,3000%
3,5000%
0,2500%
3,0000%
2,5000%
0,2000%
2,0000%
0,1500%
1,5000%
0,1000%
1,0000%
0,0500%
0,5000%
0,0000%
0,0000%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Orig
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Agglomeration
The Agglomeration effect: Greece
0,9000%
Orig
Agglomeration
The Agglomeration effect: Portugal
1,4000%
0,8000%
1,2000%
0,7000%
1,0000%
0,6000%
0,5000%
0,8000%
0,4000%
0,6000%
0,3000%
0,4000%
0,2000%
0,2000%
0,1000%
0,0000%
0,0000%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Orig
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Agglomeration
The Agglomeration effect: Czech Republic
Orig
The Agglomeration effect: Hungary
1,4000%
0,1200%
1,2000%
0,1000%
1,0000%
Agglomeration
0,0800%
0,8000%
0,0600%
0,6000%
0,0400%
0,4000%
0,0200%
0,2000%
0,0000%
0,0000%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Orig
Agglomeration
The Agglomeration effect: Slovak Republic
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Orig
Agglomeration
The Agglomeration effect: Euro zone + CZ, HU, SK
Figure 6: Results of the Agglomeration and concentration scenario
Percentage differences between scenario and baseline GDP values.
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3,5000%
0,3000%
3,0000%
0,2500%
2,5000%
0,2000%
2,0000%
0,1500%
1,5000%
0,1000%
1,0000%
0,0500%
0,5000%
0,0000%
0,0000%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Orig
Donut
Orig
Donut
The Donut effect: Greece
The Donut effect: Portugal
0,9000%
1,4000%
0,8000%
1,2000%
0,7000%
1,0000%
0,6000%
0,5000%
0,8000%
0,4000%
0,6000%
0,3000%
0,4000%
0,2000%
0,2000%
0,1000%
0,0000%
0,0000%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Orig
Donut
The Donut effect: Czech Republic
1,6000%
Orig
Donut
The Donut effect: Hungary
0,1200%
1,4000%
0,1000%
1,2000%
0,0800%
1,0000%
0,8000%
0,0600%
0,6000%
0,0400%
0,4000%
0,0200%
0,2000%
0,0000%
0,0000%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Orig
Donut
The Donut effect: Slovak Republic
Orig
Donut
The Donut effect: Euro zone + CZ, HU, SK
Figure 5: Results of the Donut scenario
Percentage differences between scenario and baseline GDP values.
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