RESEARCH PROGRAMMES

Macroeconomic modelling and regional economics

On 29 September 2005, the Vice Chancellor of Valencia University and the Director of the Foundation signed a research agreement regulating the Foundation’s involvement in the research project entitled Macroeconomic modelling and regional economics (REMS model, i.e. Rational Expectations Model for the Spanish Economy), funded by the Spanish Ministry of Economy and Finance (out of FEDER funds) and the Rafael del Pino Foundation.

The REMS is a dynamic general equilibrium model designed to simulate and evaluate macroeconomic policies. In it are meticulously described the decisions of consumers, employees, employers, the Government and the foreign sector that characterise the Spanish economy, as well as the decisions that are conditioned by the expectations of the economic players about the future evolution of the macroeconomic variables.

This model makes it possible to analyse the short- and long-term effects of changes in the international environment or of a broad range of both permanent and temporary economic policy measures, such as the macroeconomic effects of changes in interest rates by the European Central Bank (ECB), changes in oil prices, variations in the tax structure (VAT, social security contributions, personal income tax, corporate income tax, etc.), increases in public infrastructure provision, etc.