Roles of Regional Differences and Linkages on Chinese Regional Policy Effect in CGE Analysis

Abstract

This article first studied the nature of multiregional CGE models and reviewed relevant studies in such models. The article also constructed a static eight-region CGE model using an interregional input-output table for China. The model reflected the sizes of economies and differences in industrial structures across regions. More importantly, based on related empirical research, the model characterized the main economic relations across regions, such as interregional commodity flows, labor flows, and capital flows. Finally, some simulations were carried out to reveal the important effect that comes from the regional differences and linkages. The results shows the specifications of the regional differences and key linkages have significant influences on policy analysis.