The paper presents the newly developed dynamic spatial general equilibrium model of European Commission, RHOMOLO, and proposes its future extensions. The model incorporates several elements from economic geography in a novel and theoretically consistent way. It describes the location choice of different types of agents and captures the interplay between agglomeration and dispersion forces in determining the spatial equilibrium. The model is also dynamic as it allows for the accumulation of factors of production, human capital and technology. This makes RHOMOLO particularly suited for simulating policy scenario related to the EU cohesion policy and for the analysis of its impact on the regions and the Member States of the union. JEL classification: C63, C68, D58, F12, H41, O31, O40, R13, R30, R40
The aim of this paper is to discuss the process of regional convergence within the framework of an overlapping generations model in which the engine of growth is the accumulation of human capital. In particular, we consider di erent education funding systems and compare their performance in terms of growth rates and pace of convergence between two heterogeneous regions. The analysis suggests that the choice of a particular education system incorporates a possible trade-o between long run growth rate and short run convergence. In such c hoice, the initial capital stock and the extent of regional human capital discrepancy appear as central variables. JEL Classi cation numbers: O41, F22.
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