We build a sub-national version of GTAP (Global Trade Analysis Project) for Italy. GTAP is a widespread model and database among CGE (Computable General Equilibrium) users covering  more than 50 sectors and 100 countries in the world. We develop an innovative method to estimate bilateral trade flows across sub-national Italian regions. In addition, the theoretical structure is modified in order to incorporate the possibility of an increasing spatial mobility in both factors and goods market at sub-country level. We carry out a simple experiment (a negative shock on land productivity) to test the robustness of our methodology. Results are consistent with the standard CGE assumptions; moving towards more competitive and integrated markets a negative shock results in a lower loss in terms of welfare. The upgraded model allows assessing more properly the economic consequences of trade, energy and environmental policies and/or climate change impacts, whose effects can be largely different within a country.

This seminar has been jointly organized by FEEM and IEFE, Bocconi University.