Multiregional Computational General Equilibrium, and Spatial Interaction Trade Modelling: An Empirical Example.

This paper analyses the effects of enhanced trade between Austria and its four neighbouring Central
and Eastern European countries (Czech Republic, Slovak Republic, Hungary, Slovenia) on sectoral
production and regional welfare in Austria. The analysis is based on two distinct modelling traditions
at the centre of regional science. The first model (a Fischer-Johansson Model of bilateral trade flows)
is used to predict the volume and commodity composition of future trade flows based on a long term
income scenario. The predicted long-term increases of the trade flows are huge. Exports rise by 190 %
and imports by 160 % (compared to 1995). The effects of these trade flows on sectoral production and
regional welfare in Austria are simulated by means of a multiregional computable general equilibrium
model for the Austrian economy. The model contains the 9 Federal Provinces (NUTS-II). The likely
implications of the projected trade flows are measured in terms of real income, which can be expected
to rise by 1.2 %. The welfare gains will not necesarily be shared equally by all Federal Provinces. The
results indicate a clear East-West pattern with the eastern regions of Austria gaining most. (authors' abstract)