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Neoclassical and Keynesian perspectives on the regional macro-economy - a computable general equilibrium approach

Harrigan, F. and McGregor, P.G. (1989) Neoclassical and Keynesian perspectives on the regional macro-economy - a computable general equilibrium approach. Journal of Regional Science, 29 (4). pp. 555-573. ISSN 0022-4146

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Abstract

Regional economic models typically either ignore prices altogether or simply treat them as exogenously determined. An unfortunate consequence of the neglect of prices is that model builders have been very much limited in the range of macroeconomic perspectives they have been able to bring to bear on regional economic issues. In this paper, we first explain how prices can be modeled endogenously at a regional level despite the paucity of data on regional prices. Using an illustrative interregional computable general equilibrium model for Malaysia, we then demonstrate how alternative macroeconomic visions of regional systems may be captured.