Carol Taylor West

Modeling the Regional Impact of Natural Disaster and Recovery: A General Framework and an Application to Hurricane Andrew:

Two common features of natural disasters are intense regional impact and the call immediately after the event to estimate the economic impact of recovery and reconstruction. The broad purpose of this paper is to help fill the gap in the regional science literature that addresses this issue. Initially, the impact estimation problem is presented conceptually. Using a general regional model schematic, direct disaster impacts on exogenous variables, endogenous variables, and model linkages are identified. Next, the conceptual problem is adapted for practical application. This translation has two aspects: (1) modifying the direct impacts for a specific model (common variants from the schematic are considered) and (2) estimating those impacts from available data. One component of the latter identifies primary sources of information typically available at the time of a natural disaster and indicates how secondary data may be used to complement, cross-check, and expand those data. A second component identifies areas of no information or high uncertainty and discusses treatment of that information gap in empirical analysis. A final section applies the research to the problem of estimating the impact of Hurricane Andrew on the economy of Florida.

Estimating the value of foresight: aggregate analysis of natural hazard mitigation benefits and costs

Hazard mitigation planners claim that foresighted present actions and investments produce significant future benefits. However, they have difficulty in supporting their claims, since previously their evidence typically was derived from individual case studies. Constituents and decision makers are often sceptical, believing that individual cases are either inapplicable to their situation or non-randomly selected to support a particular view. Planners need objective evidence based on a large body of experience to support the case for mitigation. Such is the unique contribution of a recent U.S. study that found that each dollar spent in three federal natural hazard mitigation grant programs (the Hazard Mitigation Grant Program, Project Impact, and the Flood Mitigation Assistance Program) saves society an average of

Assessing the historical accuracy of regional economic forecasts

4 in future avoided losses. Complementing the aggregate benefit-cost analysis with community-based evaluations, the study yielded insights on how planners can improve long-term community resilience in the face of extreme events. Valuable lessons for mitigation planners and policy makers emerged: the need to consider a wide variety of losses, the importance of mixing qualitative with quantitative analysis, the value of averaging results over a large number of projects, and the need to more explicitly address social issues and data collection in order to reduce vulnerability and enhance resilience to cope with twenty-first century hazards.

Regional multi-family housing start forecast accuracy

This article provides a systematic review of regional employment forecasts in Florida and 19 metropolitan statistical areas. One-quarter- ahead to ten-quarter-ahead forecasts are analyzed for a seven-year period that includes a complete business cycle. Structural econometric model forecasts are shown to compare favorably to univariate benchmark extrapolations. Strucutral model dependency on macroeconometric model forecast inputs is not found to hamper regional predictive accuracy.

Local Government Portfolios and Regional Growth: Some Combined Dynamic CGE/Optimal Control Results

Abstract This paper extends earlier research regarding the predictability of residential construction activity in regional markets. Because of their implications for overall business conditions, housing start forecasts traditionally represent one of the most important components of regional prediction efforts. Quarterly frequency data are assembled from previously published econometric forecasts for Florida and its six largest metropolitan economies. The sample simulation period covers 1985:1–1996:2 and includes all three business cycle phases: expansion, recession, and recovery. Multi-family housing start forecasts are compared to univariate time series and random walk alternatives. Results indicate that structural model forecasts of multi-family regional housing activity are comparatively less reliable than those for nonagricultural employment, but superior to those for single-family residential construction.

The Problem of Unemployment in the United States: A Survey of 60 Years of National and State Policy Initiatives:

A theoretical policy model is presented that combines regional dynamic CGE modeling and optimal control to explore the role of local government taxation and expenditure in enhancing regional growth. It contributes to the regional CGE literature by explicitly solving for an optimal policy and augments earlier regional optimal control models by adding endogenous optimization of producer and consumer agents in response to endogenously determined prices. Results of three policy regimes are analyzed in terms of gains in the objective function, impacts on income inequality, and sensitivity to model parameterization. Copyright 2001 BlackwellPublishers

An Empirical Analysis of Stein Effects in Regional Forecasts

In the context of four types of unemployment, 23 federally initiated programs spanning six decades are critically surveyed in terms of their effectiveness at reducing unemployment. In addition, this article examines the ongoing policy debates raised by the myriad of programs and the linkage of recent research on the nature of unemployment to policy issues. Since the responsibility for formulating employment policies has significantly shifted from national to state and local government over the last decade, the evolution of state policy in this area is also surveyed and contrasted with its historical national counterpart.

Policy Sensitivity in Dynamic Optimization Models: A Study Remembering William Alonso’s Regional Modeling Perspectives:

A Stein-like shrinking methodology is proposed for modifying sets of metropolitan area economic forecasts. The technique is applied to historical published quarterly forecasts of the twenty metropolitan statistical areas of Florida. Stein-like shrinking is found to yield modest improvement in accuracy as evaluated by three alternative criteria, but the gains diminish with length of forecast horizon.

Regional Inequality by Components of Income: United States, 1969-1986*

Although William Alonso began his illustrious career as an economic equilibrium modeler, he often was critical of formal mathematical models applied in the regional context. Regional computable general equilibrium (CGE) models have theoretical characteristics similar to the economic framework underlying his seminal Location and Land Use. However, their development and application have proceeded largely unheedful of the modeling concerns Alonso expressed for three decades following his classic 1964 publication. The current research summarizes the Alonso legacy to regional forecasting and policy impact modeling and expands regional CGE modeling in that context. A 20-period dynamic CGE/optimal control model of a simplified regional economy is used to determine paths of regional tax policy and public investment in physical infrastructure and human capital that maximize the present value of real disposable per capita income. Optimal results are compared with a baseline scenario in which a “passive” regional government simply sustains initial public infrastructure. Sensitivity of outcomes to model formulation is examined.

Benefit-Cost Analysis of FEMA Hazard Mitigation Grants

A decomposition by income component of the Theil informational measure of inequality is derived and applied to U.S. regional income data. Besides potentially alleviating some current problems of directly estimating total inequality, the application suggests that such decomposition can additionally provide insight into asymmetries of intertemporal change, differences in inequality at a point in time compared with changes in that inequality over time, and identification of regional contribution to inequality.