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Resilience in a behavioural/Keynesian regional model

Author

Listed:
  • Grant Allan

    (Department of Economics, 3527University of Strathclyde, UK)

  • Gioele Figus

    (Department of Economics, 3527University of Strathclyde, UK)

  • Peter G. McGregor

    (Department of Economics, 3527University of Strathclyde, UK)

  • J. Kim Swales

Abstract

This paper constructs a regional dynamic macroeconomic model with an eclectic, broadly Keynesian and behavioural flavour. The model, which is parameterized 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 perfect foresight formulation 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.

Suggested Citation

  • Grant Allan & Gioele Figus & Peter G. McGregor & J. Kim Swales, 2021. "Resilience in a behavioural/Keynesian regional model," Environment and Planning A, , vol. 53(4), pages 858-876, June.
    • Handle: RePEc:sae:envira:v:53:y:2021:i:4:p:858-876
    DOI: 10.1177/0308518X20941775
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    References listed on IDEAS

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