Semi Endogenous Growth in a Computable General Equilibrium Approach

In this paper we present a large scale computable general equilibrium model derived from GEM-E3 model for European Union with three geographical areas and 18 different sectors. We do simulations with GAMS-PATH software algorithm which is based on mix complementarity (FOC and shadow prices). This model is interesting from a methodological point of view and for the new results it proposes. In line with endogenous growth models with innovation , we define an innovation function of which inputs consist in R&D efforts and two types of externalities, namely a fishing-out effect (negative) and a knowledge externality effect (positive). We distinguish quantitative from qualitative growth and we calibrate the model and assess the impact of endogenous growth mechanisms on the results of the model for different economic policies.