Monroe Project https://www.monroeproject.eu A modelling toolkit and an interactive online tool to quantitatively evaluate the impacts of research programmes and innovation policies Tue, 12 Mar 2019 16:35:21 +0000 en-GB hourly 1 https://wordpress.org/?v=4.9.5 https://www.monroeproject.eu/wp-content/uploads/2017/06/cropped-symbool-monroe-favicon-32x32.png Monroe Project https://www.monroeproject.eu 32 32 Workshop on Online Tool https://www.monroeproject.eu/workshop-on-online-tool/ https://www.monroeproject.eu/workshop-on-online-tool/#respond Tue, 12 Mar 2019 13:55:09 +0000 https://www.monroeproject.eu/?p=1189 On 5 February, the MONROE project organised a stakeholder workshop on the ONLINE TOOL in Brussels in order to obtain feedback from stakeholders current version of the ONLINE TOOL.

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On 5 February, the MONROE project organised a stakeholder workshop on the ONLINE TOOL in Brussels in order to obtain feedback from stakeholders current version of the ONLINE TOOL.

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Scenario Workshop https://www.monroeproject.eu/scenario-workshop/ https://www.monroeproject.eu/scenario-workshop/#respond Tue, 12 Mar 2019 13:52:37 +0000 https://www.monroeproject.eu/?p=1187 On 15 January, the MONROE project organised a stakeholder workshop on scenario at which partners presented and discussed their respective scenario proposals on the central policy scenario as well as selected model-specific policy scenarios.

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On 15 January, the MONROE project organised a stakeholder workshop on scenario at which partners presented and discussed their respective scenario proposals on the central policy scenario as well as selected model-specific policy scenarios.

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The impact of technological change on skills https://www.monroeproject.eu/the-impact-of-technological-change-on-skills/ https://www.monroeproject.eu/the-impact-of-technological-change-on-skills/#respond Wed, 07 Nov 2018 18:00:40 +0000 https://www.monroeproject.eu/?p=1197 The post The impact of technological change on skills appeared first on Monroe Project.

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Terence Hogarth is Senior Advisor at Fondazione Giacomo Brodolini and has over 30 years’ experience of carrying out research on vocational education and training in the UK and the EU. His guest blog on Cambridge Econometrics is reflecting upon the employment impacts of rapid technological change in the guise of artificial intelligence, robotics, Industry 4.0 and so forth, various authors in the recently published collection of essays “Economy employment and skills: European, regional and global perspectives in an age of uncertainty” draw attention to the issue of skills.

The impact of technological change on skills

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What is macroeconomic modelling and why do we do it? https://www.monroeproject.eu/what-is-macroeconomic-modelling-and-why-do-we-do-it/ https://www.monroeproject.eu/what-is-macroeconomic-modelling-and-why-do-we-do-it/#respond Tue, 07 Aug 2018 07:52:40 +0000 http://monroeproject.eu/?p=1072 Hector Pollitt, Head of Modelling of Cambridge Econometrtics, explores: what is economic modelling anyway and why do we do it? In the world of policy analysis models aim to represent the societies and economies that we live in, all held within a computer system. We do modelling to help understand what will happen to the […]

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Hector Pollitt, Head of Modelling of Cambridge Econometrtics, explores: what is economic modelling anyway and why do we do it?

In the world of policy analysis models aim to represent the societies and economies that we live in, all held within a computer system. We do modelling to help understand what will happen to the economy under different policies, and what this means for things that matter, like jobs and inequality.

Different models have different representations of the economy and all macroeconomic models have their strengths and weaknesses – for sure some are better than others.

The importance of macroeconomic modelling

For better or worse, macroeconomic modelling is playing an ever-larger role in policy assessments. Just to be clear, we say macroeconomic modelling as opposed to ‘economic modelling’ in order to make the distinction between what we do with microeconomic analysis, which considers interactions at the level of the individual household or company.

The EU’s Better Regulation Guidelines make macroeconomic modelling an almost mandatory part of assessing the impacts of a new policy. In the rush to meet policy makers’ deadlines, it is all too easy, however, to lose sight of the question – why do we do it?

To answer that question, first let’s consider the sorts of questions that are modelled.

“At European level, any new policies may impact on 500 million citizens; it is only reasonable to ask what the effects might be in advance. But is modelling the only way to answer that question?

It is not – a comprehensive policy assessment will include modelling as just one of a combination of qualitative and quantitative techniques.

In an ideal world, these techniques would include laboratory experiments but, while such experiments may be sometimes possible at micro level, they cannot be conducted at macro level (and, even if they could, might be subject to substantial ethical issues). Modelling thus provides a substitute for this type of experiment.”

How can macroeconomic models be used?

Broadly speaking, modelling can be used for three purposes:

  • To understand the past and present
  • To predict (forecast) the future
  • To test alternative futures

In all three cases the models aim to replicate a process of testing similar to that in a laboratory, in which a single input stimulus is changed at a time and the response to that input is tested. In the case of forecasting the future, however, the extremely large number of things that must be controlled for means the process becomes more like an artform, rather than a science-based approach.

In all cases, however, the validity of the experiment depends on how well the model can provide a representation of reality. To be clear, all models are simplifications of reality, otherwise they would be as complex as reality itself. In some cases a very simple model is desirable – if we strip out all the unnecessary stuff, then the bits that remain are a lot easier to understand.

Where models go wrong: missing the financial crisis and rational behaviour

So far, so good. But there are countless cases where modelling has gone badly wrong, and for lots of different reasons. It doesn’t take long to find strong critiques of macroeconomic modelling online, including several from highly respected economists. Two common reasons for problems…

First, oversimplification. All the forecasting models that excluded the financial sector and the build-up of private debts missed the financial crisis. That is, virtually all of them. The model builders decided that the financial sector was unnecessary and missed a crucial aspect of what they should have been analysing.

Second is the application of simplifying assumptions that run counter to reality. Textbook economics provides a long list of these (mostly including the words ‘perfect’ and ‘rational’). If they were explained individually to a non-economist, each would be rejected almost immediately. However, they all typically appear in standard Computable General Equilibrium (CGE) and Dynamic Stochastic General Equilibrium (DSGE) models, not least because the models often cannot be solved without them.

Trading off theory and empirical content

This is where economists disagree about what should and should not be included in a model. Neoclassical and New Keynesian economists accept the assumptions from textbook economics without question and incorporate them into their CGE and DSGE models.

In contrast, economists from other schools of thought strongly question these assumptions and have built models that adopt a more empirical approach to economic analysis. Cambridge Econometrics’ E3ME model is an example of such a tool.

So, to answer the questions in the title of this blog post, in the world of policy analysis macroeconomic models aim to represent the societies and economies that we live in within a computer system.

Most important is whether the model includes (in a reasonable way) all the necessary components to assess the policy that is being tested. If it does, then modelling can provide powerful insights to support a policy analysis. If it does not, then it could be a dangerous way of leading us in the wrong direction.

 

Cambridge Econometrics is a partner of the MONROE project. For the original blogpost of Hector Pollitt see: https://www.camecon.com/blog/what-is-macroeconomic-modelling-and-why-do-we-do-it/

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EU Battery Alliance launches Airbus-style consortium to make Europe a force in batteries https://www.monroeproject.eu/eu-battery-alliance-launches-airbus-style-consortium-to-make-europe-a-force-in-batteries/ https://www.monroeproject.eu/eu-battery-alliance-launches-airbus-style-consortium-to-make-europe-a-force-in-batteries/#respond Wed, 01 Aug 2018 13:41:50 +0000 http://monroeproject.eu/?p=1050 Major automotive, chemicals, raw materials, engineering and energy companies are joining forces to overcome the EU’s competitive disadvantage in next-generation battery technologies and build a European battery manufacturing base. Backed by policy support and an increase in funding from the EU, the Battery Alliance aims to increase Europe’s competitiveness vis-à-vis Asia and the US. The immediate […]

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Major automotive, chemicals, raw materials, engineering and energy companies are joining forces to overcome the EU’s competitive disadvantage in next-generation battery technologies and build a European battery manufacturing base. Backed by policy support and an increase in funding from the EU, the Battery Alliance aims to increase Europe’s competitiveness vis-à-vis Asia and the US.

The immediate objective is to create a competitive manufacturing value chain in Europe with sustainable battery cells at its core. To prevent a technological dependence on our competitors and capitalise on the job, growth and investment potential of batteries, Europe has to move fast in the global race. According to some forecasts, Europe could capture a battery market of up to €250 billion a year from 2025 onwards. Covering the EU demand alone requires at least 10 to 20 ‘gigafactories’ (large-scale battery cell production facilities).

Across EU MS the ability to transform research into profitable innovation varies considerably, this is a phenomenon named the “European Paradox”. The structural factors that are key in explaining this paradox according to Andrés Rodríguez-Pose (2014) are i) the quality of human capital, b) structure of economic fabrics, c) migration of skilled personnel and d) deficient institutional settings. Work package 3.4 of MONROE focusses on improving the representation of human capital and its link with R&I in the CGE models. The assessment of R&I policies will be more realistic because the CGE modelling framework will be able to capture the response of intangible capital accumulation in services, how it feedbacks into manufacturing productivity and how it interacts with the accumulation of human capital.

For more information on the “European Paradox”, see
Rodríguez-Pose, A., & Di Cataldo, M. (2014). Quality of government and innovative performance in the regions of Europe. Journal of Economic Geography, 15(4), 673-706.

For more information on the EU battery alliance, see
https://sciencebusiness.net/news/eu-battery-alliance-launches-airbus-style-consortium-make-europe-force-batteries
https://www.ceps.eu/publications/european-battery-alliance-ambitions-and-requirements
https://ec.europa.eu/growth/industry/policy/european-battery-alliance_en

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Special Session on Modelling of R&D and Innovation Policy as a part of the SMARTER Conference 2018 https://www.monroeproject.eu/special-session-on-modelling-of-rd-and-innovation-policy-as-a-part-of-smarter-conference-2018/ https://www.monroeproject.eu/special-session-on-modelling-of-rd-and-innovation-policy-as-a-part-of-smarter-conference-2018/#respond Wed, 01 Aug 2018 11:26:45 +0000 http://monroeproject.eu/?p=1038 The post Special Session on Modelling of R&D and Innovation Policy as a part of the SMARTER Conference 2018 appeared first on Monroe Project.

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The MONROE project is working on organizing a special session on modelling of R&D and innovation policy as a part of 2018 SMARTER Conference on Smart Specialisation and Territorial Development that will take place in Seville (26th-28th of September). This conference offers a comprehensive picture of the smart specialisation policy experience, including an evaluation of its early results, and highlights recent developments both conceptually and empirically. Particular attention will be given to implementation challenges and ways to address them, as well as to methodologies for impact assessment. In addition, the conference will explore how smart specialisation engages with global value chains and production networks, and how firms, regions and cities can benefit from relationships across the borders.

For more information on the 2018 SMARTER Conference, see http://s3platform.jrc.ec.europa.eu/-/second-smarter-conference-on-smart-specialisation-and-territorial-development?inheritRedirect=trueh

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MONROE-FRAME Workshop https://www.monroeproject.eu/monroe-frame-workshop/ https://www.monroeproject.eu/monroe-frame-workshop/#respond Wed, 01 Aug 2018 11:13:42 +0000 http://monroeproject.eu/?p=1035 The post MONROE-FRAME Workshop appeared first on Monroe Project.

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The MONROE-FRAME workshop took place on the 7th of June at the DG RTD premises in Brussels. The workshop was attended by participants from DG RTD, DG ECFN, DG REGIO and JRC. Tom Holden has given a presentation of MONROE DSGE model and its first estimation on data for US and Germany as well as the first policy simulations. Other presentations were given by the members of FRAME project consortium who have presented the structure of their base DSGE model and results of econometric estimations of the knowledge production function using country-level data.

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Regionalization of EU-KLEMS database https://www.monroeproject.eu/regionalization-of-eu-klems-database-2/ https://www.monroeproject.eu/regionalization-of-eu-klems-database-2/#respond Wed, 04 Apr 2018 08:56:08 +0000 http://monroeproject.eu/?p=958 Regionalization of EU-KLEMS database As a part of MONROE project PBL has prepared a regionalized (at the level of NUTS2) version of EU-KLEMS growth accounting database for EU28. The data has been constructed by collecting and harmonizing various regional data sources both from Eurostat, ESPON and national statistical offices. Regional data has been used to […]

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Regionalization of EU-KLEMS database

As a part of MONROE project PBL has prepared a regionalized (at the level of NUTS2) version of EU-KLEMS growth accounting database for EU28. The data has been constructed by collecting and harmonizing various regional data sources both from Eurostat, ESPON and national statistical offices. Regional data has been used to split the national EU-KLEMS datasets to the level of regions. This unique dataset will be used in MONROE to prepare econometric estimations of endogenous growth parts of the regional economic model EU-EMS (European Economic Modelling System).

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First version of human capital module in GEM-E3 model https://www.monroeproject.eu/first-version-of-human-capital-module-in-gem-e3-model-2/ https://www.monroeproject.eu/first-version-of-human-capital-module-in-gem-e3-model-2/#respond Wed, 04 Apr 2018 08:54:01 +0000 http://monroeproject.eu/?p=956 First version of human capital module in GEM-E3 model has been completed E3-Modelling has finalized the first empirical implementation of the human capital module in GEM-E3 model. This innovative modelling element allows for the calculation of human capital development over time and gives information about the amount of time that different population groups devote to […]

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First version of human capital module in GEM-E3 model has been completed

E3-Modelling has finalized the first empirical implementation of the human capital module in GEM-E3 model. This innovative modelling element allows for the calculation of human capital development over time and gives information about the amount of time that different population groups devote to work , leisure and study.

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Workshop on SCGE modelling https://www.monroeproject.eu/workshop-on-scge-modelling-2/ https://www.monroeproject.eu/workshop-on-scge-modelling-2/#respond Wed, 04 Apr 2018 08:51:17 +0000 http://monroeproject.eu/?p=954 International workshop on SCGE modelling on 14th of March in Brussels MONROE project coordinator Dr. Olga Ivanova has presented the design of regional-economic model RTL-Growth for European regions that predicts their population, productivity, growth, sectoral structure and trade flows at the long-term (until 2050) in Brussels on the 4th International Workshop on SCGE modelling that […]

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International workshop on SCGE modelling on 14th of March in Brussels

MONROE project coordinator Dr. Olga Ivanova has presented the design of regional-economic model RTL-Growth for European regions that predicts their population, productivity, growth, sectoral structure and trade flows at the long-term (until 2050) in Brussels on the 4th International Workshop on SCGE modelling that has been organized by Kobe University and TU Delft.

 

 

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