A price-responsive framework for interregional input-output

In interregional analysis, supply models are based typically on defined sets of ‘representative firms’ with given ‘averaged’ technological and cost coefficients, such that, when aggregated as identical units into both sectors and regions, they reproduce the total output of each sector in each region. Then, deterministic models obtain profit-maximising patterns of input demands and corresponding output, prior to aggregating these quantities as if the firms were truly identical and homogeneous. In this paper, the above optimisation models are replaced by a probabilistic framework, which nevertheless guarantees convergence to the above classical deterministic solutions in the limit. The models are estimated on ‘observed’ flows, technological coefficients and prices, and a CES function (optionally) handles substitution between primary factors. These new input-output models become explicitly price-responsive, allowing tatonnement with spatial models of final demand. Received: June 1996 / Accepted: February 1997     

Findings on input-output in a small area context

Even if the i-o method is a very popular instrument in regional studies in many countries, the generalizations concerning the crucial problems of its practical applications, i.e., compilation of a transactions table and assumption of coefficient stability, cannot be regarded as well-established. The present study deals with the methodological comparison of two i-o studies made at an interval of five years; the area under consideration is a small regional economy in Eastern Finland, Special attention is directed to the stability and influence of the most important coefficients, which are identified both on the basis of size and of a special index. Complementary findings are provided by analyzing sectoral time-series data on foreign import coefficients by regions. The conclusions derived accentuate the necessity of regional primary data in i-o accounts on the one hand, and the significance of random factors as far as the shifts of regional coefficients and their correspondence to the national ones are concerned on the other. The latter issue is obviously more important in small regional economies in highly integrated national economies, where the effect of distance on input structure by sectors is of minor importance.     

Technique and technology in regional input-output

In thirty years, regional input-output has emerged from its origins as a research technique developed by a few pioneering academics and has become a practical tool widely used by a large commercial market. This development of regional input-output techniques is traced and considered in the context of technological change. While regional input-output remained the preserve of academics it was a technique supported by the technology of Regional Science. The diffusion of the technique has not always been accompanied by the diffusion of the technology with the result that regional input-output has increasingly been abused by those who seek to make the most practical use of the technique.     

Dynamic multipliers for a regional input-output model

Regional multiplier is a very useful and popular tool in economic study of a region. However, conventional regional multiplier derived from a static input-output model fails to provide time path of the impact over period. In many cases, it restricts the impact within a year period. To alleviate the problem, this paper introduces a regional dynamic multiplier which makes the impact to spread out over period. In the absence of the technical change, each period multiplier added up to the static multiplier. Utilizing Oklahoma data, the paper estimates the capital coefficients and the dynamic multipliers of Oklahoma regional economy. Finally, it provides a comparative study of dynamic multipliers for various industries.The author is grateful to Professor Wassily Leontief who generously sent him the U.S. Capital Coefficient data and to the referees for their valuable suggestions. This research was supported in part by the Center for Economic and Management Research, the University of Oklahoma. Mr. Chun K. Chang and Mr. Ui Nam Choi provided computer assistance and data gathering works. The final revision was done at Harvard University.     

The choice of an input-output table embedded in regional econometric input-output models

In this paper, we investigate the role of input-output data sources in regional econometric input-output models. While there has been a great deal of experimentation focused on the accuracy of alternative methods for estimating regional inputoutput coefficients, little attention has been directed to the role of accuracy when the input-output system is nested within a broader accounting framework. The issues of accuracy were considered in two contexts, forecasting and impact analysis focusing on a model developed for the Chicago region. We experimented with three input-output data sources: observed regional data, national input-output, and randomly generated inputoutput coefficients. The effects of different sources of input-output data on regional econometric input-output models revealed that there are significant differences in results obtained in both forecast and impact analyses. The adjustment processes inherent in the econometric input-output system did not mask the differences imbedded in input-output tables derived from different data sources. Since applications of these types of models involve both impact and forecasting exercises, there should be strong motivation for basing the syste on the most accurate set of input-output accounts.     

Regional input-output multipliers without a full I-O table

This paper describes a new procedure for computing approximate interindustry multipliers which can be used for specific industries if the proportion of that industry's purchases from within the region is known and if the average intraregional proportion of purchases is known for all industries within the region. The result is that with very limited information the output multipliers can be approximated rather closely.The paper discusses the rationale of the procedure and provides empirical evidence that it does provide close approximations of the multipliers computed from full I-O tables. It is also demonstrated that the procedure can be extended to make estimates of income multipliers and is suggested that employment and other multipliers can also be estimated using the procedures demonstrated.Joseph L. Katz is a doctoral student in the Department of Quantitative Methods at Louisiana State University, USA. Thanks are due Sheila Jeter for her cheerful assistance in typing the several versions of this paper.     

Emerging challenges in regional input-output analysis

The changing interests and focus of research in the field of regional input-output analysis is examined. After reviewing some of the recent trends and suggesting the tenor of the prevailing philosophy in the field, attention is focused on three, interdependent emerging trends. These are characterized as (1) the conceptualization of input-output within the traditions of econometric analysis; (2) the integration of input-output with other regional and interregional models and (3) attempts to link input-output analysis with regional growth and development theory.The support of the National Science Foundation (Grant No. SES 84-05961), International Programs and Studies, University of Illinois and the University of Queensland Development Fund is appreciated.     

Emerging challenges in regional input-output analysis

The changing interests and focus of research in the field of regional input-output analysis is examined. After reviewing some of the recent trends and suggesting the tenor of the prevailing philosophy in the field, attention is focused on three, interdependent emerging trends. These are characterized as (1) the conceptualization of input-output within the traditions of econometric analysis; (2) the integration of input-output with other regional and interregional models and (3) attempts to link input-output analysis with regional growth and development theory.     

Air pollution abatement and manpower requirements,a regional input-output analysis

Using cost estimates for the control of particulate matter and sulfur dioxide emissions in the state of West Virginia developed in a recent study by William H. Miernyk and J. Sears, this paper examines the impact of meeting federal air pollution abatement standards on manpower requirements in that region. Within a regional input-output framework, the effects of the technological changes and the capital requirements of several abatement alternatives are presented and compared.     

On the aggregation problem in input-output models

The purpose of this paper is to shed new light on the consistent aggregation problem in input-output systems by making use of some properties ofM-matrices. For example, we show that the stability of a multisectoral dynamic multiplier model is invariant under consistent aggregation, that a consistently aggregated dynamic Leontief model is relatively stable if the original system is stable, and that Gillen and Guccione's Third Proposition can be generalized to cover the case of weighted aggregation.     

Extended input-output models: progress and potential

"This article presents a critical survey of research on extended input-output models, emphasizing recent developments in demographic-economic and socio-economic analysis. Basic principles of model design and construction are reviewed, by reference to a representative selection of extended models. Two research themes--labor market analysis and income distribution--are pursued in greater detail as examples of the directions of current work. A comparison is made between extended models and social accounting matrices."     

Central place theory and intercommunity input-output analysis

This paper explores trade hierarchies and interindustry relationships, first in theory, then in the empirical context of a western United States timber economy facing a large reduction in its timber harvest. Principles of central place theory guide construction of a hybrid intercommunity input-output model. A nonsurvey technique for estimating central place trade is developed, and is compared with MRIO methods. The effect of central place dominance on intercommunity multipliers is examined theoretically, as is the nature of feedback linkages in a central place hierarchy. The empirical magnitude of feedback effects is small, and although effects vary in magnitude from community to community, neglect of central place considerations can understate intercommunity sawmill multipliers by as much as 36 percent.     

Interregional migration in an extended input-output model

"This article develops a two-region version of an extended input-output model that disaggregates consumption among employed, unemployed, and inmigrant households, and which explicitly models the influx into a region of migrants to take up a proportion of any jobs created in the regional economy. The model is empirically tested using real data for the Scotland (UK) regions of Strathclyde and Rest-of-Scotland. Sets of interregional economic, demographic, demo-economic, and econo-demographic multipliers are developed and discussed, and the effects of a range of economic and demographic impacts are modeled. The circumstances under which Hawkins-Simon conditions for non-negativity are breached are identified, and the limits of the model discussed."     

Regional input-output analysis,data and uncertainty

This paper addresses two major issues. The first is the introduction of uncertainty into the framework of classical deterministic regional input-output (I-O) analysis. Secondly, the role of the use of measurable flow data on the fundamental structure of the models is explored. The opening section uncovers an anomaly in the classical approach when flows between regions of final demand products, external exports and imports are neglected in comparison to the flows of internal intermediate inputs. Next, we introduce uncertainty into the analysis by extending an entropy formulation developed by Wilson, which itself evolved from the formalism established by Leontief-Strout (L-S). The main enhancements include (i) the introduction of regional output capacities to capture spillovers from regions operating close to capacity, (ii) the inclusion of flows of external imports and exports and (iii) the use of total measurable flows as input which are readily available from surveys, yielding as output not only the total flows of each sector between each pair of regions, but (optionally) the further disaggregation of these flows to include their final destination sector or their use as final demand. In fact, a key objective is to structurally account for the joint influence of technology, output capacities and transportation costs on the pattern of intermediate and final demand flows between regions. Further extensions of the approach lead to the generation of probabilistic supply functions as tools within a potential CGE analysis. This option requires the introduction of prices, permitting a profit constraint to replace the simple transport cost constraint of the earlier models.Received: August 2000 / Accepted: April 2003     

Agglomeration and spillovers in a simultaneous framework

Previous studies have emphasized reduced transaction costs, knowledge spillovers, diverse intermediate goods suppliers, and deep labor pools as possible drivers of firm agglomeration. Among these candidates, knowledge spillovers lie at the heart of discussions in the literature. If knowledge spillovers are so important, it follows that firms tend to locate in proximity to capitalize on the knowledge stock in neighboring firms. Therefore, agglomeration and spillovers reinforce each other. However, most existing empirical studies ignore the potential endogenous relationship between the two. Moreover, few studies have even attempted to measure knowledge spillovers. In this paper, I address both issues by developing and estimating a simultaneous equation model of agglomeration and knowledge spillovers. The results suggest that traditional single equation models do indeed suffer endogeneity and that the accuracy of the estimation can be substantially improved by employing a simultaneous system.Received: June 2003/Accepted: March 2004The author gratefully acknowledges valuable comments and constant encouragement from Edward Feser.