Multiregional Models of Economic Interactions: Comparative Analysis

Abstract

The article deals with the problems of measuring spatial multipliers on the basis of multiregional models of economic interactions. Two lines of comparative analysis of multiregional models are distinguished: 1) depending on the choice of trade coefficients specification, 2) depending on the choice of the format of balance equations (input-output tables vs social accounting matrices). Interregional balances of Japan, constructed in accordance with Walter Isard’s model on the basis of officially confirmed statistics on interregional trade, are used as a basis for comparison. The focus is on ‘classical’ multiregional models with a high degree of transparency of assumption systems: the Chenery-Moses model, in which the destination sectors of products imported into the region are unknown, and the Leontief-Strout model, in which the volumes of interregional trade are also unknown. The calculations have shown that compensatory feedback mechanisms operate in multiregional systems, as a result of which there is no obvious proportional relationship between the amount of actual information on interregional trade used in the construction of balances and the accuracy of estimates of spatial multipliers. The specifics of different multiregional models are manifested primarily in the estimates of structural components of spatial multipliers – system effects formed in the markets of different hierarchical levels. The assumption of greater accuracy of multiregional matrices of social accounting (as compared to multiregional input-output tables due to the greater number of compensatory feedback mechanisms) is confirmed only at the level of sectoral average spatial multipliers. These calculations lead to the conclusion that when working with multiregional models (especially in the framework of detailed analysis of spatial multipliers – in the context of different sectors or markets of different hierarchical levels) it is important to take into account the discursive techniques used to derive them

Keywords

• multiregional system
• economic interactions
• spatial multiplier
• feedback effect
• gravity equation
• input-output table
• social accounting matrix