Rhomolo: A Dynamic Spatial General Equilibrium Model for Assessing the Impact of Cohesion Policy

The paper presents the newly developed dynamic spatial general equilibrium model of European Commission - RHOMOLO, in which the interplay of agglomeration and dispersion forces can be analysed in a novel and theoretically consistent way. A particular attention is paid to flows of goods, factors and services within and between regions that are generated by the stimulus to the regions. This will allow an assessment of the feedback to the Member States and regions and the possibility that in the longer run they will all benefit from the additional growth that is generated. In doing so, it sheds new light on how the success of cohesion policy can be measured.