Some Conceptual Difficulties Regarding 'Net' Multipliers
Multipliers are routinely used for impact evaluation of private projects and public policies at the national and subnational levels. Oosterhaven and Stelder (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 is 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.
|Date of creation:||21 Sep 2012|
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- Louis Mesnard, 2007.
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The Annals of Regional Science,
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UFAE and IAE Working Papers
887.11, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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- Louis Mesnard, 2007. "Reply to Oosterhaven’s: the net multiplier is a new key sector indicator," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(2), pages 285-296, June.
- repec:dgr:rugsom:04c01 is not listed on IDEAS
- Louis De Mesnard, 2002.
"Note about the concept of ‘Net Multipliers',"
- 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.
- 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).
- 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.
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