Abstract
Regional models cover a wide range of sizes and employ a variety of techniques in their calibration and estimation. They can be divided into two groups. The first group is composed of nonstructural models. Their use includes predictions based on past trends, analysis of regional changes based on national industry changes, and shifts in the local share of these national industries. This group also may employ statistical methods, which search for past regularities in regional data. The second group of models are called structural models, because these models include the cause-and-effect relationships in a regional economy. The relationships that explain how participants in the economy respond to changes that affect them, such as the change in consumption that would occur if income changes, are called behavioral relationships. Other types of relationships in a structural model would include definitional and technical relationships.
This chapter is adapted in part from George I. Treyz (1986). The chapter was also written in part by Frederick Treyz.
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Notes on Chapter 2
The identity output = income assumes that all value added by local production (wages, profits, rents, etc.) is paid out to households or to local governments (through local taxes). This assumption is dropped later in the chapter.
Note that net inflows to the state could be used to finance CG rather than IL, if they exceed the value of local investment (IL).
In the traditional economic base model, ILp is combined with CG and considered endogenous. We do not combine them because it is difficult to envision ILp, which includes investment to build new capital stock, to be a fraction of a flow variable, such as income.
Any points off the 45-degree line imply that output exceeds expenditure or expenditure exceeds output. If this were the case, we would observe an unplanned inventory increase (or decrease), which would lead businesses to lower (or raise) output until output reached the equilibrium point.
Business Statistics 1961–88 (December 1989), page 3.
For a more complete treatment of this subject see Marschack, J. (1953).
The source for this table (2–9) is 1987 County Business Patterns, Bureau of the Census, U.S. Department of Commerce for the first ten sectors and Regional Economic Information Systems (REIS) from the Bureau of Economic Analysis (BEA) for the last two sectors.
The complete data for any county or state are available in university libraries and directly from the Bureau of the Census by calling (202) 763–4100 or writing Customer Service Branch, Data Users Service Division (DUSD), Washington Plaza, Bureau of the Census, Washington, D.C. 20233.
Source for table 2–10: 1987 County Business Patterns, Bureau of the Census, U.S. Department of Commerce.
Source for table 2–11: same as 10 supra.
Hereafter, the abbreviation n.e.c. will appear in place of the phrase “not elsewhere classified.”
Source for table 2–12: 1987 County Business Patterns, Bureau of the Census, U.S. Department of Commerce.
Source for table 2–13: 1987 County Business Patterns.
Source for table 2–14: 1987 County Business Patterns.
All from the Survey of Current Business (SCB) Vol. 72, No. 1, table 1.1, January, 1992, p. 25.
Survey of Current Business, Vol. 71, No. 12, December 1991, table 4, p. 50.
Survey of Current Business, Vol. 72, No. 1, table 1.1, p. 25.
Idem.
Ibid, Table 2.1, p. 33.
All data from Survey of Current Business, Vol. 72, No. 1, January 1992, p. 5 and 25.
Ibid, table 1.2, p. 25; 2.1, p. 33; 1.1, p. 5.
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© 1993 Springer Science+Business Media New York
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Treyz, G.I. (1993). Economic Base Models. In: Regional Economic Modeling: A Systematic Approach to Economic Forecasting and Policy Analysis. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-2874-4_2
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