A structural multisectoral model with new economic geography linkages for Tuscany

This paper describes the Remi‐Irpet macroeconometric multisectoral model. The Remi‐Irpet, based on an input‐output core structure, has its most distinctive feature in the modelling of vertical pecuniary externalities à la Fujita‐Krugman‐Venables which represents the core dynamization mechanism. Our contribution first presents the theoretical background of the model. Second, we present a simulation exercise performed through the model in which we evaluate the structural impact of incoming FDIs for Tuscany. The impact analysis is defined in terms of (i) change in the overall productive capacity and (ii) medium‐term changes in prices and productivity, driven by the changes in the accessibility to labour and intermediate inputs.