Integrating SCGE and I-O in Multiregional Modelling

Abstract

Economic activities can be modeled at different levels of aggregation. Different levels of detail regarding spatial or temporal resolution, or levels of sectoral aggregation are appropriate depending on the question at hand. In cases where changes on the micro scale affects what happens at the macro level, and vice versa, an integrated approach is required. In this paper a modeling framework is presented, where focus is placed on the interactions between production and employment. The aggregate spatial computable general equilibrium model STRAGO is interacted with the highly detailed input-output model system rAps. Interregional and intersectoral relations of production, including agglomeration, are represented in the aggregate model, providing a coarse description of production by which the rAps model system is constrained. Such constraints will affect where individuals may find a suitable job. At the same time the aggregate model is dependent on the labour supply, provided by rAps, in determining production. An application of the proposed modeling framework is presented where future projections are compared to historical data.