Evidence-based regional economic policy analysis: the role of CGE modelling

An important ingredient in meeting the challenges for regional policy is evidence-based analysis capable of revealing the full ramifications of economic policies and events across regions. This paper considers the capabilities of computable general equilibrium (CGE) modelling to provide such analysis. After summarising the main features of CGE models, we examine how they can be put to work to inform regional policymakers. We first consider historical CGE analysis designed to uncover the economic causes underlying relative regional performance. We then discuss CGE regional forecasting and policy modelling, highlighting the model's analytical capabilities in revealing the regional consequences of a wide range of regional policy initiatives.