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DEMOS-Demokratisk og effektiv styring, planlegging og forvaltning

A Norwegian Regional General Equilibrium Modelling System NoReg

Alternative title: Norsk regional generell likevektsmodell NoReg

Awarded: NOK 20.0 mill.

Norwegian Regional General Equilibrium Modelling System NOREG NOREG 2 is a new flexible regional general equilibrium model that combines the traditionally applied general equilibrium model, which has been used in Norwegian economic planning since the 1960s, with regional modeling all the way down to the municipal level. NOREG 2 is a regional general equilibrium model for the Norwegian economy which is particularly well suited to analyze long-term and structural political issues related to demography, oil prices, technological development, foreign balance, climate policy, energy efficiency and a number of other topics. The model is now available in version NOREG 2.2. New in version 2.2 is that the labor force now consists of four categories with different levels of education, and that the movement of labor between the zones in the model is included endogenously. This model extension makes the model well suited for analyzing regional effects educational policy instruments as well as regional migration effects of all structural policy issues that are analyzed with the modelling system. One of the things that makes the NOREG- model unique, is that it can study the regional implications of national and international trends and policy areas, and thus also effective regional policy (counter) measures. The model will be expanded and developed over the 10-year project period. Within the project, an annual NOREG report will be published with updated regional projections and policy simulations at national and local level. The project will contribute to the research front on the modelling of regional effects of important structural changes, raise the relevance and strengthen the Norwegian institutions in the fields of economic geography and urban- and regional studies.

The research project consists of three pillars: Pillar 1: We will develop a spatial computable general equilibrium (SCGE) model named NoReg 2.0 that builds on two existing SCGE-models for Norway: PINGO and NOREG. The model will be operational less than one year after project start and will form the platform for further studies. It will forecast employment, production, value added, use of capital, migration, demography education etc for 25 sectors and 89 separate Norwegian regions (NUTS 4). Through the 10-year period (5+5) we will gradually improve this model by integrating sub-models and empirical insights that are developed under pillar 2. We will publish an annual NoReg-report with updated regional forecasts and policy simulations at national and local levels. Pillar 2: We will conduct frontier research that will develop and expand the model over time. There are 6 projects under this pillar: 1) a consistent regional structure based on national accounting rules. 2) interregional migration, labour market mobility and immigration. 3) a detailed and relevant module of the public sector for regional activity studies. 4) the regional effects of downscaling the petroleum sector. 5) how traveling distances and agglomeration affects regional productivity growth in the model. 6) design a dynamic model structure based on forward looking consumers and firms. All projects are will lead to an updated version of NoReg. Pillar 3: We will create a vital, open and user-based forum that allows users to understand, operate and interpret the model. The forums will also function as a guide in the further model development. We plan to establish a web page ( where publications, new model versions, meetings, new insights and discussions are published online. In Pillar 3 we will design a user platform that allows users to simulate on their own on the web-page. We will also offer a help service for registered users to ensure that the model is used and understood properly.

Funding scheme:

DEMOS-Demokratisk og effektiv styring, planlegging og forvaltning