Developing a New Spatial Computable General Equilibrium Model for Norway
W Hansen, Institute of Transport Economics, NO
This paper presents the development and the first application of a new Spatial Computable General Equilibrium (SCGE) model for Norway.
"In this paper the theoretical foundation for a new Spatial Computable General Equilibrium (SCGE) model for Norway is developed. The applicability of this new model is tested by using data collected from national accounts by county from Statistics Norway, data from the national network model for freight transport, the foreign trade statistics and other sources.
The initial SCGE-modell for Norway, PINGO, was developed by Ivanova, Vold and Jean-Hansen (2002). Vold and Jean-Hansen (2007) developed a second version of the PINGO model, making it consistent with the year 2003 base case matrices and the logistic model for freight transport in Norway, and further disaggregating sectors and commodity groups. These earlier Norwegian SCGE-models exhibits constant returns to scale and perfect competition, has no migration and no segmentation of household groups.
In the development of a new SCGE-model for Norway the conventional neoclassical general equilibrium techniques are mixed with elements from the?new economic geography? theory. By this we are able to model and study the effects of (dis)economies of scale, economies of agglomeration and imperfect competition.
In the model the assumption of average cost pricing in combination with the Dixit-Stiglitz framework of monopolistic competition and love of varieties, a long with the mobility of physical capital and labor, will be applied in order to modell the agglomeration effects associated with the ?new economic geography? theory.
The model will be applied to study the effects on the environment and the spatial location of economic activity of exogenous perturbations in endowments, policy changes, new infrastructure, etc."
Association for European Transport