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Economic Base Multipliers Revisited


  • Derek Bond

    () (University of Ulster)

  • Michael J. Harrison

    () (Trinity College Dublin)

  • Edward J. O'Brien

    () (European Central Bank)


This paper takes a fresh look at the estimation of economic base multipliers. It uses recent developments in both nonstationary and nonlinear inference to consider issues surrounding the derivation of such multipliers for Northern Ireland. It highlights the problem of distinguishing between nonstationarity and nonlinearity in empirical work. The results of standard unit root and cointegration analysis call into question the adequacy of that framework for estimating employment multipliers. There is strong evidence of nonlinearity; and modelling using random field regression supports the findings of Harrison and Bond (1992) that there is substantial parameter instability or nonlinearity in the data.

Suggested Citation

  • Derek Bond & Michael J. Harrison & Edward J. O'Brien, 2007. "Economic Base Multipliers Revisited," Trinity Economics Papers tep0807, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:tep0807

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    References listed on IDEAS

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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