Developing Regional Input-Output Models from the U.N. Format Adopted by the U.S. in the New 1972 Input-Output Model

Since the mid-1940s, interest in the interrelationships of subnational economies has been growing. Part of this interest flows from a realization of the need to manage regional growth and mitigate the effects of economically unstable components of regional economies on the welfare of the people within the region. Aggregated macroeconomic models applied at the national level commonly provide insufficient information about their components, the regional economies. This lack has led to the development of state and regional macro models which can provide specific information relevant to state or local decision makers. Such information includes the availability of regional resources necessary to support and expand regional production and the impacts of changes in demand on the welfare of local inhabitants. These models are also useful in estimating the impacts of national policy on regional economies. The development of regional input-output models is an example of the trend toward fuller understanding of regional economies. State or regional input-output models can be constructed either by survey or by estimation from the national input-output model. Time and money constraints have increased the popularity of the latter approach among regional economists.