Regional Policy Spillovers: The National Impact of Demand-Side Policy in an Interregional Model of the UK Economy

UK regional policy has been advocated as a means of reducing regional disparities and stimulating national growth. However, there is limited understanding of the interregional and national effects of such a policy. This paper uses an interregional computable general equilibrium model to identify the...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Gilmartin, Michelle, Learmonth, David, McGregor, Peter, Swales, Kim, Turner, Karen
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2011
Subjects
Labor market
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Summary:UK regional policy has been advocated as a means of reducing regional disparities and stimulating national growth. However, there is limited understanding of the interregional and national effects of such a policy. This paper uses an interregional computable general equilibrium model to identify the national impact of a policy-induced regional demand shock under alternative labour market closures. Our simulation results suggest that regional policy operating solely on the demand side has significant national impacts. Furthermore, the effects on the non-target region are particularly sensitive to the treatment of the regional labour market.