Geoffrey J. D. Hewings

Coefficient Change in Input–Output Models: Theory and Applications

A general theory of coefficient change in input–output and social accounting models is proposed. The major contribution is the introduction of the notion of a ‘field of influence’ as the basis for interpreting the effects of coefficient change. This basis is elaborated through a set of propositions. In Section 3, the implications are explored; first, the first-order changes in one row or column are examined. This approach is then generalized to changes in two or more rows or columns and the biproportional or RAS technique is shown to be a special case of coefficient change. Empirical applications are presented in Section 4, drawing on the work in regional and national economies. The paper concludes with some remarks about ways in which this work might be linked with parallel interests in decomposition of input–output systems.

Forecasting structural change with a regional econometric input-output model

The sophistication of regional economic models has been demonstrated in several ways, most recently in the form of linking several modeling systems or in the expansion in the number of equations that can be manipulated successfully to produce impact analyses or forecasts. In this paper, an alternative perspective is employed. What do regional macro-level forecasts indicate about the process of structural change? A new methodology is illustrated that enables analysts to make forecasts of detailed structural change in the interindustry relations in an economy. Using a regional econometric-input-output model developed for the Chicago Metropolitan region, derived input-output tables are extracted for the period 1975-2016. These tables are then analyzed to determine the forecasted direction of structural changes for the region. The innovation illustrated here is based on a model that exploits the general equilibrium spirit of computable general equilibrium models through the adjustment of input coefficients to clear markets.

Linkages, Key Sectors and Structural Change: Some New Perspectives

Recent exchanges in the literature on the identification and role of key sectors in national and regional economies have highlighted the difficulties of consensus regarding terminology, appropriate measurement as well as economic interpretation. In this paper, some new perspectives are advanced which provide a more comprehensive view of an economy and offer the potential for uncovering alternative perspectives about the role of linkages and multipliers in input-output and expanded social accounting systems. The analysis draws on some pioneering work by Miyazawa in the identification of internal and external multiplier effects. The theoretical techniques are illustrated by reference to a set of input-output tables for the Brazilian economy. The paper thus provides a more comprehensive view than the ones proposed by Baer, Fonseca, and Guilhoto (1987), Hewings, Fonseca, Guilhoto, and Sonis (1989) and the recent contributions of Clements and Rossi (1991, 1992) that draw on some earlier work of Cella (1984).

Linkages and Multipliers in a Multiregional Framework: Integration of Alternative Approaches

In this paper, two literatures that have explored the structure of economies are brought together. In the first case, the approaches to key sector identification (initially associated with Hirschman and Rasmussen) that were modified by Cella, Clements and Rossi and Guilhoto et al. to reveal what may be referred to a pure linkage approach are related to the concerns of Miyazawa and his identification of internal and external multiplier effects. While Miyazawa was interested mainly in identifying the sources of change in an economy, his approach shares considerable commonality with the new ideas in key sector identification in which a sector or set of sectors are separated from the rest of the economy. Hence, in both cases, a decomposition of the economy needs to be considered; the present paper reveals the similarity of perspective and provides the formal link between the two methodologies.

Regional, interregional and multiregional input-output analysis

Publisher Summary This chapter focuses on regional, interregional, and multiregional input-output analysis. Unlike many other branches of regional economics and regional science, the development of regional and interregional models occurred almost contemporaneously with the growth of interest in national-level input–output modeling. In the book, Studies in the structure of the American economy , there is a discussion on regional models, specifically on the theory of interregional models and on some of the empirical and conceptual problems associated with regional analysis. These developments are discussed in more detail in the chapter. It presents some linkages of input–output analysis with other standard modeling techniques, further reinforcing the notion that the input–output framework has a considerable degree of flexibility in its contribution to an understanding of the structure of an economy. The chapter explores in detail the input–output model and its characteristics and provides several extensions of input–output analysis.

Key sectors and structural change in the Brazilian economy: A comparison of alternative approaches and their policy implications

Abstract Attempts to identify key sectors in an economy with input-output models have been a source of considerable debate. In this paper, several old and new approaches to the problem are evaluated with reference to the Brazilian economy using the input-output models for 1959, 1970 and 1975. Two alternative approaches are suggested in this paper. The first of these focuses on key coefficients through the identification of fields of influence associated with changes in these coefficients, including the effects of simultaneous changes in more than one coefficient. The second approach decomposes the interindustry transactions into a set (hierarchy) of flows. It is claimed that the flows associated with the higher levels of the hierarchy can be considered as the key flows or most important transactions. These new approaches are compared to earlier techniques to examine the degree to which important changes in the economy could be detected.

Measuring Economic Impacts of Disasters: Interregional Input-Output Analysis Using Sequential Interindustry Model

The damages and losses by disasters, such as earthquakes, floods, tornadoes, and other major natural disasters, or man-made disasters, have significant and intense impacts on a region’s economy. In addition, the impacts from the damages will spread over time, and will bring serious economic effects to other regions in a long run. Furthermore, the impacts of disasters are very complex, including not only the negative effects from damages and losses, but also the positive economic effects from the recovery and reconstruction activities. Most economic models and techniques cannot confront these significant changes in a relatively short time period, since they assume incremental, and/or predictable changes in systems over time. And, the unexpected nature of these events, especially in the case of earthquakes, creates a further complication of measuring the indirect impacts (Okuyama et al., 2002). At the same time, most available data for the direct damages and losses and of the recovery processes are engineering oriented, i. e., physical damages and disruption of lifelines and their repair and restoration, and the dimension and unit of these data are quite different from the economic counterpart—very detailed and short time span in engineering data while aggregated and longer time span in economic models. Consequently, these differences pose great challenges in order to model economic impacts of disasters.

Sources of Structural Change in Input–Output Systems: A Field of Influence Approach

The analysis of structural change with input–output (IO) tables is extended beyond the initial ideas of Chenery and Watanabe, and beyond the recent applications of Feldman et al. and Dewhurst, to embrace a more comprehensive view. With this perspective, change is decomposed into three initial components, and these components are further divided into change initiated within the sector and outside the sector. The analysis is then linked with the notion of a ‘field of influence of change’ to provide a more complete view of the way in which changes penetrate the rest of the economic system. The analytical perspectives are illustrated with applications to a three-sector set of IO tables for the US economy for the period 1948–77.

Agglomeration and Trade: Some Additional Perspectives

The form of agglomeration economies (those internal to the firm as well as those external to it) is reviewed. Consideration is next given to recent changes in the regional (state) economies of the US Midwest, as part of an effort to explore the evolving nature of agglomeration economies. Particular attention is paid to the changing relationship between the establishment and the firm and to radical developments that have affected the transportation sector. The impact of these changes on the nature of interstate trade and on the structure of the metropolitan economy are then examined. There follows a discussion of how agglomeration economies are being supplemented and perhaps replaced by less spatially-constrained advantages. Finally, certain of the more important implications of these various trends are discussed.

The role of prior information in updating regional input-output models☆

Abstract The research reported here focuses on several issues: (1) the specification and measurement of errors in single region input-output models and their impacts on the construction of new models from survey and nonsurvey sources and the updating of existing models; (2) the problems of errors in input-output models when the latter are incorporated into more extensive social accounting systems and (3) linkages between the aggregation issue, error analysis and micro-to-macro modelling within an input-output framework. Empirical analysis is conducted on many of these issues by reference to the State of Washington input-output models for 1963, 1967 and 1972.