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The Expenditure Impacts of Individual Higher Education Institutions (HEIs) and their Students on the Scottish Economy under Devolution: Homogeneity or Heterogeneity?

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Author Info

  • Kristinn Hermannsson

    ()
    (Fraser of Allander Institute, Department of Economics, Strathclyde University)

  • Katerina Lisenkova

    ()
    (Fraser of Allander Institute, Department of Economics, Strathclyde University)

  • Peter McGregor

    ()
    (Fraser of Allander Institute, Department of Economics, Strathclyde University)

  • Kim Swales

    ()
    (Department of Economics, Strathclyde University)

Abstract

Comparing each of the twenty Higher Education Institutions (HEIs) in Scotland as separate sectors in an Input-Output table suggests their expenditure patterns are homogenous and that the apparent heterogeneity of their impacts is primarily driven by scale. However, a disaggregation of their income by source reveals a disparity in their dependence upon funding from the devolved Scottish Government and their ability to draw in income/funding from external sources. Acknowledging the binding budget constraint of the Scottish Government and deriving balanced expenditure multipliers reveals large differences in the net-expenditure impact of HEIs upon the Scottish economy, with the source of variation being the origin of income. Applying a novel treatment of student expenditure impacts, identifying the amount of exogenous spending per student, modifies the heterogeneity of the overall expenditure impacts. On balance this suggests that the impacts of impending budget cut-backs will be quite different by institution depending on their sensitivity to public funding. However, predicting the outcome of budget cutbacks at the margin is problematic as we do not know whether public and external incomes are complements or substitutions (and indeed this may vary between individual HEIs).

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Bibliographic Info

Paper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 1016.

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Length: 42 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:str:wpaper:1016

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Keywords: Higher Education Institutions; Input-Output; Scotland; Impact study; Multipliers; Devolution.;

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  1. Scott Loveridge, 2004. "A Typology and Assessment of Multi-sector Regional Economic Impact Models," Regional Studies, Taylor & Francis Journals, vol. 38(3), pages 305-317.
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Cited by:
  1. Kristinn, Hermannsson & Peter G., McGregor & J. Kim, Swales, 2013. "Consumption Expenditures in Economic Impact Studies: An Application to University Students," SIRE Discussion Papers 2013-62, Scottish Institute for Research in Economics (SIRE).

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