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The paper presents the newly developed dynamic spatial general equilibriummodel of European Commission, RHOMOLO. The model incorporates several elementsfrom economic geography in a novel and theoretically consistent way. Itdescribes the location choice of different types of agents and captures theinterplay between agglomeration and dispersion forces in determining thespatial equilibrium. The model is also dynamic as it allows for theaccumulation of factors of production, human capital and technology. This makesRHOMOLO well suited for simulating policy scenario related to the EU cohesionpolicy and for the analysis of its impact on the regions and the Member Statesof the union.

RHOMOLO: A Dynamic Spatial General Equilibrium Model for Assessing the Impact of Cohesion Policy