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The Extended Econometric Input-Output Model With Heterogeneous Household Demand System

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  • Kijin Kim
  • Kurt Kratena
  • Geoffrey J.D. Hewings

Abstract

This paper proposes an extension to the regional econometric input-output model (REIM) [Conway, R.S. (1990) The Washington Projection and Simulation Model: A Regional Interindustry Econometric Model. International Regional Science Review , 13, 141-165; Israilevich, P.R., G.J.D. Hewings, M. Sonis and G.R. Schindler (1997) Forecasting Structural Change with a Regional Econometric Input-Output Model. Journal of Regional Science , 37, 565-590]. We integrate a demand system with age and income parameters into the REIM. The extended model thus addresses concerns about the effects of household heterogeneity. The initial testing is conducted with a model for the Chicago metropolitan area. First, using aggregate expenditure data by income and age groups, the almost ideal demand system with group fixed effects is constructed. Next, the estimated demand system is linked to the REIM to reflect long-term changes in the age and income distribution of households. The long-range simulation from the extended model takes into account structural changes in expenditure type stemming from changing demographic composition. The extended model further broadens the scope of impact analysis under various scenarios associated with age and income changes.

Suggested Citation

  • Kijin Kim & Kurt Kratena & Geoffrey J.D. Hewings, 2015. "The Extended Econometric Input-Output Model With Heterogeneous Household Demand System," Economic Systems Research, Taylor & Francis Journals, vol. 27(2), pages 257-285, June.
    • Handle: RePEc:taf:ecsysr:v:27:y:2015:i:2:p:257-285
    DOI: 10.1080/09535314.2014.991778
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    1. Kurt Kratena & Gerhard Streicher, 2017. "Fiscal Policy Multipliers and Spillovers in a Multi-Regional Macroeconomic Input-Output Model," WIFO Working Papers 540, WIFO.
    2. Bjelle, Eivind Lekve & Wiebe, Kirsten S. & Többen, Johannes & Tisserant, Alexandre & Ivanova, Diana & Vita, Gibran & Wood, Richard, 2021. "Future changes in consumption: The income effect on greenhouse gas emissions," Energy Economics, Elsevier, vol. 95(C).
    3. Xiuli Liu & Geoffrey J. D. Hewings, 2019. "Identification of changes in the economic interactions among sectors from 1995 to 2010 for Chicago economy using hierarchical feedback loop analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(3), pages 637-655, June.
    4. Takuro Uehara & Mateo Cordier & Bertrand Hamaide, 2018. "Fully Dynamic Input-Output/System Dynamics Modeling for Ecological-Economic System Analysis," Post-Print hal-02862512, HAL.
    5. Christopher Cotton & Bahman Kashi & Huw Lloyd‐Ellis & Frederic Tremblay & Brett Crowley, 2022. "Quantifying the economic impacts of COVID‐19 policy responses on Canada's provinces in (almost) real time," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 406-445, February.
    6. Peter W. J. Batey, 2018. "What Can Demographic–Economic Modeling Tell Us about the Consequences of Regional Decline?," International Regional Science Review, , vol. 41(2), pages 256-281, March.
    7. Takuro Uehara & Mateo Cordier & Bertrand Hamaide, 2018. "Fully Dynamic Input-Output/System Dynamics Modeling for Ecological-Economic System Analysis," Sustainability, MDPI, vol. 10(6), pages 1-22, May.
    8. Ferreira, João-Pedro & Marques, João Lourenço & Moreno Pires, Sara & Iha, Katsunori & Galli, Alessandro, 2023. "Supporting national-level policies for sustainable consumption in Portugal: A socio-economic Ecological Footprint analysis," Ecological Economics, Elsevier, vol. 205(C).
    9. Takuro Uehara & Mateo Cordier & Bertrand Hamaide, 2018. "Fully dynamic input-output/system dynamics modeling for ecological-economic system analysis," ULB Institutional Repository 2013/277116, ULB -- Universite Libre de Bruxelles.
    10. Umed Temursho & Matthias Weitzel & Toon Vandyck, 2020. "Distributional impacts of reaching ambitious near-term climate targets across households with heterogeneous consumption patterns: A quantitative macro-micro assessment for the 2030 Climate Target Plan," JRC Research Reports JRC121765, Joint Research Centre.
    11. Peter W. J. Batey & Geoffrey J. D. Hewings, 2021. "Demo-economic Modeling: Review and Prospects," International Regional Science Review, , vol. 44(3-4), pages 328-362, May.
    12. Zhang, Hongxia & Hewings, Geoffrey J.D. & Zheng, Xinye, 2019. "The effects of carbon taxation in China: An analysis based on energy input-output model in hybrid units," Energy Policy, Elsevier, vol. 128(C), pages 223-234.

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