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The impact of production and infrastructure shocks: A non-linear input-output programming approach, tested on an hypothetical economy

  • Nozaki, Michiya
  • Bouwmeester, Maaike C.
  • Oosterhaven, Jan

    (Groningen University)

This paper develops a methodology to predict the wider interregional and interindustry economic impacts of major catastrophes, such as earthquakes and tsunamis. Short-run impacts are determined by the attempts of economic actors to continue their familiar activities and established trade patterns, as closely as possible. We propose to model these behavioural reactions by minimizing the information gain between the pre- and the post-catastrophe pattern of economic transactions in the economy at hand. The basic non-linear program reproduces the short-run equilibrium described by the base year interregional input-output table (IRIOT) of a hypothetical open, two regions, two industries economy. The proposed methodology is further tested by means of a comparison of the base scenario with two scenarios with regional production shocks and two scenarios with interregional infrastructure shocks. We conclude that the outcomes are reasonable and become more plausible when the positive foreign trade balance limitation is dropped.

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Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 13017-GEM.

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Date of creation: 2013
Date of revision:
Handle: RePEc:dgr:rugsom:13017-gem
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  1. Temurshoev, Umed & Oosterhaven, Jan, 2013. "Analytical and Empirical Comparison of Policy-Relevant Key Sector Measures," GGDC Research Memorandum GD-132, Groningen Growth and Development Centre, University of Groningen.
  2. Jan Oosterhaven, 2012. "Adding Supply-Driven Consumption Makes The Ghosh Model Even More Implausible," Economic Systems Research, Taylor & Francis Journals, vol. 24(1), pages 101-111, October.
  3. M Sonis & J Oosterhaven, 1996. "Input - output cross analysis: a theoretical account," Environment and Planning A, Pion Ltd, London, vol. 28(8), pages 1507-1517, August.
  4. Theo Junius & Jan Oosterhaven, 2003. "The Solution of Updating or Regionalizing a Matrix with both Positive and Negative Entries," Economic Systems Research, Taylor & Francis Journals, vol. 15(1), pages 87-96, March.
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