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Modelling and Forecasting Regional Growth: The MASST Model

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Abstract

Among the vast number of regional growth forecasting models, the past 15 years witnessed the emergence of the MAcroeconomic, Sectoral, Social, Territorial (MASST) model. The MASST model aims at merging macroeconomic elements with territorial features for forecasting regional growth trajectories. In fact, the model was created with the aim to overcome the dichotomous approaches interpreting regional growth either as a bottom-up process without macroeconomic elements, or a top-down one, whereby national growth rates are reassigned to regions according to their weights, neglecting any role that regional propulsive forces may have. The model has now reached its fourth generation. The aim of this chapter is first to present a discussion of the theoretical framework where the MASST model was first conceived, and then to highlight the advances of the model. Each new version was inspired by crucial events that influenced the structural relationships estimated in the model. The paper concludes highlighting the model’s predictive power for assessing possible future growth patterns of European regions, and hinting at possible research directions for the next generation of the model.

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Notes

  1. 1.

    Source of raw data: EUROSTAT. Productivity measured as per capita GDP in PPS.

  2. 2.

    The most celebrated regional growth forecasting models include the GMR model, the RHOMOLO and REMI models, and the MASST model presented in this chapter. For a critical review of these models, see Brandsma et al. (2015); Gori and Paniccià (2015); Varga and Sebestyén (2017); and Capello et al. (2017).

  3. 3.

    For a thorough discussion of the features of demand-driven models, see Cochrane and Poot (2014).

  4. 4.

    For this kind of forecasting models, see, e.g. the RHOMOLO model (Lecca et al. 2019).

  5. 5.

    For this kind of forecasting models, see, e.g. Cappellin (1975, 1976).

  6. 6.

    These theoretical models have been translated into micro-founded testable growth equations by Mankiw et al. (1992).

  7. 7.

    The first version of the model is presented in detail in Capello (2007).

  8. 8.

    The MASST4 version is presented in details in Capello and Caragliu (2020).

  9. 9.

    Possibly a bit of an overstatement.

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  1. ABC Department, Politecnico di Milano, Milan, Italy

    Roberta Capello & Andrea Caragliu

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  1. Roberta Capello
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Correspondence to Andrea Caragliu .

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  1. Dept of Economics & Finance, Università Cattolica del Sacro Cuore, Milano, Italy

    Stefano Colombo

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Capello, R., Caragliu, A. (2021). Modelling and Forecasting Regional Growth: The MASST Model. In: Colombo, S. (eds) Spatial Economics Volume II. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-40094-1_3

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