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Lessons from the debate on Cole's model closure

Author

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  • Jan Oosterhaven

    (Departments of Economics and of Spatial Sciences, University of Groningen, 9700 AV Groningen, The Netherlands)

Abstract

Cole (1989, 1997, 1999) advocates the introduction of expenditure lags and the fullest possible closure of single-region input-output models. Jackson et al. (1997, 1999) claim that closing also with regard to the Rest-of-the-World leads to inconsistencies and zero exogenous demand, which makes impact studies impossible. Using somewhat different arguments I agree with them: endogenous interregional feedbacks are conceptually impossible outside a full interregional model. Two hardly discussed points, however, remain for further research. First, closing with regard to all other regional demand is precarious too, as it empirically and theoretically amplifies the one-sidedness of the demand-driven input-output model. Realistic impact studies ask for models including supply-side aspects. Second, adding expenditure lags is an improvement, but the way in which this can be done and should be done requires further theoretical development.

Suggested Citation

  • Jan Oosterhaven, 2000. "Lessons from the debate on Cole's model closure," Papers in Regional Science, Springer;Regional Science Association International, vol. 79(2), pages 233-242.
    • Handle: RePEc:spr:presci:v:79:y:2000:i:2:p:233-242
    Note: Received: December 1999
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    Citations

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    Cited by:

    1. repec:dgr:rugsom:04c01 is not listed on IDEAS
    2. Oosterhaven, Jan, 2004. "On the definition of key sectors and the stability of net versus gross multipliers," Research Report 04C01, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    3. Oosterhaven, Jan, 2002. "On the dynamics of net versus gross multipliers," ERSA conference papers ersa02p005, European Regional Science Association.
    4. Andre F. T. Avelino & Sandy Dall'erba, 2019. "Comparing the Economic Impact of Natural Disasters Generated by Different Input–Output Models: An Application to the 2007 Chehalis River Flood (WA)," Risk Analysis, John Wiley & Sons, vol. 39(1), pages 85-104, January.
    5. Maria Llop, 2012. "The role of saving and investment in a SAM price model," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 339-357, February.
    6. Yasuhide Okuyama & Michael Sonis & Geoffrey Hewings, 2006. "Typology of structural change in a regional economy: a temporal inverse analysis," Economic Systems Research, Taylor & Francis Journals, vol. 18(2), pages 133-153.

    More about this item

    Keywords

    Input-output analysis; social accounting; model closure; expenditure lags; supply effects;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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