Lessons from the debate on Cole's model closure
AbstractCole (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.
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Bibliographic InfoArticle provided by Springer in its journal Papers in Regional Science.
Volume (Year): 79 (2000)
Issue (Month): 2 ()
Note: Received: December 1999
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Find related papers by JEL classification:
- C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
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- 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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