Impact Analysis with Regional Econometric Models

Abstract

The purpose of this paper is to set out the uses of regional econometric models for economic impact analysis. By impact analysis, I mean the problem of analyzing and forecasting the ramifications of exogenous shocks to regional economic systems. Such shocks might come from changes in ex-regional economic policy (such as stimulative or deflationary fiscal or monetary policy), more specific ex-regional spending decisions (changes in federal government spending, such as the closing of a defense facility), and other related types of phenomena. Through the use of regional econometric models, analysts can capture the direct and indirect effects on regions. For further treatment of this subject, see Klein and Glickman (1977), Glickman (1974), and L’Esperance (1976).