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Economic convergence : policy implications from a heterogeneous agent model

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  • Dawid, Herbert
  • Harting, Philipp
  • Neugart, Michael

Abstract

In this paper we study the effectiveness of different types of cohesion policies with respect to convergence of regions. A two-region agent-based macroeconomic model is used to analyze short-, medium- and long-term effects of policies improving human capital and fostering adoption of technologies in lagging regions. With fully integrated labor markets the human capital policy positively affects the economically stronger region but reduces production in the targeted weaker region. Subsidies for high technology investment in the weaker region have a positive local output effect and a negative effect on the neighboring region, thereby fostering convergence. When labor markets are not integrated both policies support convergence.
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Suggested Citation

  • Dawid, Herbert & Harting, Philipp & Neugart, Michael, 2014. "Economic convergence : policy implications from a heterogeneous agent model," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 65228, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:65228
    DOI: 10.1016/j.jedc.2014.04.004
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/65228/
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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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