Resilience in a behavioural/Keynesian regional computable general equilibrium model

Figus, Gioele and Allan, Grant and McGregor, Peter G. and Swales, J. Kim (2019) Resilience in a behavioural/Keynesian regional computable general equilibrium model. In: 27th International Input-Output Association Conference & 9th Edition of the International School of I-O Analysis, 2019-06-30 - 2019-07-05, University of Strathclyde.

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    Abstract

    This paper constructs a regional dynamic macroeconomic model with an eclectic, broadly Keynesian and behavioural flavour. The model, which is parameterised on Scottish data, is used to identify the impact of expectations and business confidence on regional resilience. Simulations compare the evolution of the regional economy after a temporary negative export shock under a range of investment functions. The mainstream neo-classical perfect-foresight form generates a reduction in activity which is small and is limited to the duration of the shock. The heuristic-based, imperfect-information investment models produce more negative, longer-lasting and unstable adjustment paths.