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Some conceptual difficulties regarding ‘net’ multipliers

  • Ferran Sancho


Multipliers are routinely used for impact evaluation of private projects and public policies at the national and subnational levels. Oosterhaven and Stelder (J Reg Sci 42(3), 533–543, 2002 ) correctly pointed out the misuse of standard ‘gross’ multipliers and proposed the concept of ‘net’ multiplier as a solution to this bad practice. We prove their proposal is not well founded. We do so by showing that supporting theorems are faulty in enunciation and demonstration. The proofs are flawed due to an analytical error, but the theorems themselves cannot be salvaged as generic, non-curiosum counterexamples demonstrate. We also provide a general analytical framework for multipliers and, using it, we show that standard ‘gross’ multipliers are all that are needed within the interindustry model since they follow the causal logic of the economic model, are well-defined and independent of exogenous shocks, and are interpretable as predictors for change. Copyright Springer-Verlag Berlin Heidelberg 2013

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Article provided by Springer in its journal The Annals of Regional Science.

Volume (Year): 51 (2013)
Issue (Month): 2 (October)
Pages: 537-552

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Handle: RePEc:spr:anresc:v:51:y:2013:i:2:p:537-552
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  1. Ferran Sancho, 2012. "Straightening out the concept of direct and indirect input requirements," Economics Bulletin, AccessEcon, vol. 32(1), pages 502-509.
  2. Erik Dietzenbacher, 2005. "More on multipliers," Journal of Regional Science, Wiley Blackwell, vol. 45(2), pages 421-426.
  3. Louis De Mesnard, 2007. "A critical comment on Oosterhaven–Stelder net multipliers," Post-Print halshs-00114634, HAL.
  4. Louis de Mesnard, 2002. "NoteAbout the Concept of "Net Multipliers"," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 545-548.
  5. Louis Mesnard, 2007. "Reply to Oosterhaven’s: the net multiplier is a new key sector indicator," The Annals of Regional Science, Springer, vol. 41(2), pages 285-296, June.
  6. Gim, Ho Un & Kim, Koonchan, 1998. "The General Relation between Two Different Notions of Direct and Indirect Input Requirements," Journal of Macroeconomics, Elsevier, vol. 20(1), pages 199-208, January.
  7. Jan Oosterhaven & Dirk Stelder, 2002. "Net Multipliers Avoid Exaggerating Impacts: With A Bi-Regional Illustration for the Dutch Transportation Sector," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 533-543.
  8. Jan Oosterhaven, 2007. "The net multiplier is a new key sector indicator: reply to De Mesnard’s comment," The Annals of Regional Science, Springer, vol. 41(2), pages 273-283, June.
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