RHOMOLO is the spatial computable general equilibrium model of the European Commission focusing on EU regions. It has been developed and maintained by the regional economic modelling team at the Directorate-General Joint Research Centre (DG JRC) in cooperation with Directorate-General for Regional and Urban Policy (DG REGIO). It is used for policy impact assessment and provides sector-, region- and time-specific simulations to support to EU policy making on investments and reforms covering a wide array of policies.

RHOMOLO (v2) covers all EU regions, disaggregating their economies into NACE rev.2 sectors, entailing a constant effort on data updating and maintenance. All the monetary transactions in the economy are included in the model as results of agents making optimising decision. Goods and services are consumed by households, government and firms, and are produced in markets that can be perfectly or imperfectly competitive. Spatial interactions between regions are captured through costly trade matrices of goods and services, factor mobility through migration and investments, and knowledge spill-overs. This makes RHOMOLO particularly well suited for analysing policies related to investments in human capital, transport infrastructure and innovation.

RHOMOLO is built following the same micro-founded general equilibrium approach as the national DSGE model QUEST, developed by the Directorate-General for Economic and Financial Affairs (DG ECFIN), and is often used in combination with it to provide a breakdown of results by region and sector, taking duly into account the specificities of each model.

For more information about the model, see the technical documentation or visit the RHOMOLO homepage on the EU Science Hub.

The RHOMOLO model is designed for policy impact assessment. The explicitly modelled spatial dimension makes it a unique tool for territorial impact assessment. Spatial interactions between regional economies are captured through trade of goods and services (which is subject to trade costs), income flows, factor mobility and knowledge spillovers, making RHOMOLO particularly well suited for simulating human capital, transport infrastructure, R&D and innovation policies.


The Regional Economic Modelling team (REMO) is part of the Territorial Development Unit of the Growth & Innovation Directorate in the Directorate-General Joint Research Centre (in short, JRC.B.3), located in Seville, Spain. The team currently consists of Javier Barbero, Andries Brandsma, Martin Christensen, Francesco Di Comite (team leader), Olga Diukanova, Patrizio Lecca, Giovanni Mandras, Damiaan Persyn and Stylianos Sakkas. See the people section below for details and contact information.

A key responsibility of the team is the development, maintenance and use of the RHOMOLO model, a spatial CGE model with a focus on EU regions and sectors developed in cooperation with Directorate-General for Regional and Urban Policy (DG REGIO) and used for impact assessment of investment policies and reforms. A web tool has been developed to allow users to have an idea of how the model works by running simple simulations of structural changes (in labour productivity, total factor productivity and transport costs) on a simplified version of RHOMOLO.

In addition, the REMO team provides analytical support to EU policy making by developing regional models and tools to address the needs of different stakeholders, including the other DGs of the European Commission, the European Investment Bank and local authorities. In order to run the model, the REMO team has developed and constantly updates a dataset including a consistent set of EU NUTS2-level economic variables, such as value added, employment, production and consumption for NACE Rev.2 sectors, in addition to information on bilateral trace costs and flows. Our model and dataset are available under request to researchers and practitioners who may need them.

Our analytical focus is on the issues of competitiveness and social cohesion, which are two key pillars for a sustainable and prosperous European Union. A large part of the EU budget is devoted to promote inclusive development and we aim at supporting policy makers in assessing the impact of their choices. Economic impact assessment regional policies is a complex task, not at least because it affects a wide range of macroeconomic variables, including GDP, employment, productivity, budget deficit and trade balance, which are interrelated and affected by a large number of external factors. The use of a general equilibrium model such as RHOMOLO, which accounts for inter-regional and spatial connections, is thus needed to ensure a balanced assessment of the overall consequences of a given policy not only on the regions and sectors targeted, but also on the rest of the economy. Our main contribution to policy making is therefore to create awareness on secondary effects of policies, on their unintended consequences and on their positive spillovers. In doing so, we can interact and collaborate with colleagues in the policy and research areas by translating specific policy proposals into model perturbations and provide an idea of their general equilibrium consequences.


People

For more information, please use this contact form, or have a look at their personal pages to contact a specific team member.


Scientific policy support


Peer reviewed journal articles


Working papers