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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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File URL: http://hdl.handle.net/10.1007/s00168-012-0542-0
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Article provided by Springer & Western Regional Science Association 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
DOI: 10.1007/s00168-012-0542-0
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  1. Ferran Sancho, 2011. "Straightening out the concept of direct and indirect input requirements," UFAE and IAE Working Papers 887.11, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  2. Jan Oosterhaven, 2007. "The net multiplier is a new key sector indicator: reply to De Mesnard’s comment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(2), pages 273-283, June.
  3. Louis De Mesnard, 2007. "Reply to Oosterhaven's: the net multiplier is a new key sector indicator," Post-Print halshs-00114636, 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. repec:dgr:rugsom:04c01 is not listed on IDEAS
  6. 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.
  7. Louis De Mesnard, 2007. "A critical comment on Oosterhaven–Stelder net multipliers," Post-Print halshs-00114634, HAL.
  8. Erik Dietzenbacher, 2005. "More on multipliers," Journal of Regional Science, Wiley Blackwell, vol. 45(2), pages 421-426.
  9. Oosterhaven, Jan, 2004. "On the definition of key sectors and the stability of net versus gross multipliers," Research Report 04C01, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  10. 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.
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