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Spillover and Feedback Effects in General Equilibrium Interregional Models of the National Economy: A Requiem for Interregional Input-Output?

In: Understanding and Interpreting Economic Structure

Author

Listed:
  • Peter G. McGregor

    (University of Strathclyde)

  • J. Kim Swales

    (University of Strathclyde)

  • Ya Ping Yin

    (University of Strathclyde)

Abstract

Input-output is the most widely employed general equilibrium model for the analysis of demand disturbances to the regional economy. However, whilst input-output systems are relatively easy to implement, they have severe limitations. These include fixed production and consumption coefficients and a neglect of supply-side constraints. Therefore, although input-output is a convenient technique to use, the key question is whether it is appropriate for modeling a regional market economy. McGregor et al (1996a) argue that the outcomes predicted in a large range of conventional economic models for “small” regions converge on input-output results in the long run. Essentially, where a small region’s factor markets are ultimately fully integrated into their national counterparts, there is no regional scarcity of resources at the existing ruling prices. The addition of cost functions which are linear and homogeneous in input prices and output, together with cost minimization and any form of mark-up pricing, generates the demand-invariant prices which motivate fixed production and consumption coefficients.

Suggested Citation

  • Peter G. McGregor & J. Kim Swales & Ya Ping Yin, 1999. "Spillover and Feedback Effects in General Equilibrium Interregional Models of the National Economy: A Requiem for Interregional Input-Output?," Advances in Spatial Science, in: Geoffrey J. D. Hewings & Michael Sonis & Moss Madden & Yoshio Kimura (ed.), Understanding and Interpreting Economic Structure, chapter 9, pages 167-190, Springer.
    • Handle: RePEc:spr:adspcp:978-3-662-03947-2_9
    DOI: 10.1007/978-3-662-03947-2_9
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    Citations

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    Cited by:

    1. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "An HEI-Disaggregated Input-Output Table for Scotland," SIRE Discussion Papers 2010-52, Scottish Institute for Research in Economics (SIRE).
    2. Michelle Gilmartin & David Learmouth & J Kim Swales & Peter McGregor & Karen Turner, 2013. "Regional Policy Spillovers: The National Impact of Demand-Side Policy in an Interregional Model of the UK Economy," Environment and Planning A, , vol. 45(4), pages 814-834, April.
    3. Gong, Ziqian & Cai, Yongyang, 2022. "Development under Spatial Equilibrium for the Great Lakes Region," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322115, Agricultural and Applied Economics Association.
    4. Soo Ha & J. Swales, 2012. "The export-base model with a supply-side stimulus to the export sector," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(2), pages 323-353, October.
    5. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "Policy Scepticism and the Impact of Northern Irish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," SIRE Discussion Papers 2010-78, Scottish Institute for Research in Economics (SIRE).
    6. Giesecke, James A. & Madden, John R., 2013. "Regional Computable General Equilibrium Modeling," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 379-475, Elsevier.
    7. Michelle Gilmartin & Kim Swales & Karen Turner, 2008. "A Comparison of Results From MRIO and Interregional Computable General Equilibrium (CGE) Analyses of the Impacts of a Positive Demand Shock on the ‘CO2 Trade Balance’ Between Scotland and the Rest," Working Papers 0808, University of Strathclyde Business School, Department of Economics.
    8. James A Giesecke & John R Madden, 2006. "Uncovering the Factors behind Comparative Regional Economic Performance: A Dynamic CGE Approach," Centre of Policy Studies/IMPACT Centre Working Papers g-165, Victoria University, Centre of Policy Studies/IMPACT Centre.
    9. E McVittie & J K Swales, 1999. "Sector-Specific Factor Subsidies and Employment in a Regional Price-Endogenous Export-Base Model," Environment and Planning A, , vol. 31(12), pages 2145-2168, December.
    10. Hakan Yilmazkuday, 2017. "Individual tax rates and regional tax revenues: a cross-state analysis," Regional Studies, Taylor & Francis Journals, vol. 51(5), pages 701-711, May.
    11. Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "Policy Scepticism and the Impact of Welsh Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints," SIRE Discussion Papers 2010-72, Scottish Institute for Research in Economics (SIRE).
    12. Karen Turner & Michelle Gilmartin & Peter G. McGregor & J. Kim Swales, 2012. "An integrated IO and CGE approach to analysing changes in environmental trade balances," Papers in Regional Science, Wiley Blackwell, vol. 91(1), pages 161-180, March.
    13. Kristinn Hermannsson & Katerina Lisenkova & Peter G. McGregor & J. Kim Swales, 2014. "'Policy Scepticism' and the Impact of Scottish Higher Education Institutions (HEIs) on their Host Region: Accounting for Regional Budget Constraints under Devolution," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 400-417, February.
    14. Turner, Karen & Gilmartin, Michelle & McGregor, Peter G. & Swales, J. Kim, 2009. "The added value from adopting a CGE approach to analyse changes in environmental trade balances," SIRE Discussion Papers 2009-13, Scottish Institute for Research in Economics (SIRE).
    15. James A. Giesecke & John R. Madden, 2013. "Evidence-based regional economic policy analysis: the role of CGE modelling," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 6(2), pages 285-301.
    16. Kristinn Hermannsson & Katerina Lisenkova & Peter McGregor & Kim Swales, 2010. "An HEI-Disaggregated Input-Output Table for Wales," Working Papers 1021, University of Strathclyde Business School, Department of Economics.
    17. Hermannsson, Kristinn & Lisenkova, Katerina & McGregor, Peter G. & Swales, J. Kim, 2010. "Policy Scepticism and the Impact of London-based Higher Education Institutions (HEIs) on the economy of England: Accounting for Alternative Uses of Public Expenditure," SIRE Discussion Papers 2010-97, Scottish Institute for Research in Economics (SIRE).
    18. James Giesecke & John Madden, 2010. "Uncovering the Factors behind Comparative Regional Economic Performance: A Multi-regional Computable General Equilibrium (CGE) Approach," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1329-1349.
    19. James Giesecke, 2008. "A Top-down Framework for Regional Historical Analysis," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(1), pages 45-87.
    20. Quanrun Chen & Erik Dietzenbacher & Bart Los, 2015. "Structural decomposition analyses: the differences between applying the semi-closed and the open input–output model," Environment and Planning A, , vol. 47(8), pages 1713-1735, August.
    21. Kristinn Hermannsson & Katerina Lisenkova & Peter G McGregor & J Kim Swales, 2011. "Regional Impact Analyses and the Appropriate Treatment of Regional Budget Constraints under Devolution: An Application to the Impact of Scottish HEIs," ERSA conference papers ersa10p1595, European Regional Science Association.

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