Macroeconomic evaluation of EU R&I Policies : ways and Means ; L'Évaluation Macroéconomique des Politiques de R&I de l'UE : l'Art et la Manière

Abstract

This PhD thesis describes the R&I mechanisms that the macroeconomic models QUEST III, NEMESIS and RHOMOLO incorporate, and how these models are used to evaluate the R&I policies that are introduced and monitored by the General Directorate for R&I of the EC. QUEST III, NEMESIS and RHOMOLO are models belonging to different economic traditions, and also possess different levels of detail. QUEST is a macroeconomic Dynamic Stochastic General Equilibrium (DSGE) model, the most in line with modern macroeconomic theory. There is one model for every EU(28) country, with microeconomic foundations explicitly derived from inter-temporal profit and utility maximization under perfect foresight, as in the general equilibrium setting of modern theoretical models of economic growth. NEMESIS is, like QUEST, a model for every EU(28) country, but the two models are very different in their modeling approach. NEMESIS is a macro-sectorial model (30 sectors) of neo-Keynesian inspiration. There are adjustment costs, adaptive expectations, wage rigidities and exogenous exchange and interest rates, which prevents the model from describing a general equilibrium, even in the long-run. RHOMOLO, is a spatial model based on the new economic geography theories and is the more detailed geographically, as it describes the general equilibrium modeling of 267 EU regional economies and their interactions. This model also has a sectorial dimension and each region contains 10 economic sectors. Like NEMESIS, the great level of detail of RHOMOLO, prevents any forward-looking dynamics, and both models are solved according to a recursively dynamic approach. To model innovation, what the three models have in common is that they were inspired by the strong empirical evidence, that investments in R&D were at the origin of major technological innovations and TFP growth in advanced industrialized countries over the past decades. On the theoretical side, they all also refer, explicitly or implicitly, to the New Growth Theories that have emerged ...