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2022 | Buch

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Empirical Regional Economics

Economic Base Theory, Models and Applications

verfasst von: Dr. Richard S. Conway Jr.

Verlag: Springer International Publishing

Buchreihe : Springer Texts in Business and Economics

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This textbook offers an introduction to empirical regional economics, including a comprehensive and systematic overview of the fundamentals, history, development, and applications of economic base models. It not only provides a sound basis for regional economics and regional economic analysis, but it also includes numerous applications of the underlying theory. The book has an empirical orientation, highlighting the value of observation and testing in order to explain regional economic behavior. Theory plays an important role in this study, but it is only a starting point.

The book is divided into three parts: the first discusses the economic base theory of regional growth and the empirical evidence supporting it, while the second part covers the specification and application of four increasingly complex regional economic models: the economic base model, the input-output model, the interindustry econometric model, and the structural time-series model. Lastly, the third part presents forty-eight regional economic case studies organized under seven headings, including economic cycles, economic policy, and regional forecasting.

Given its scope, the book appeals to upper-undergraduate and graduate students majoring in economics, economic geography, and business, as well as to anyone in the private or public sector interested in gaining a better understanding of practical methods of regional economic forecasting and analysis.

Inhaltsverzeichnis

Frontmatter

Regional Economic Base Theory

Frontmatter

Chapter 1. Economic Base Theory of Regional Growth

Abstract

In the 1950s, Douglass North and Charles Tiebout engaged in a debate on the nature of regional economic growth. The discourse led to the formulation of the economic base model, a simple but powerful means of explaining and forecasting the process of regional economic growth. Fundamentally, the model rests on two propositions: the ability to produce goods and services for export is the key to regional economic growth; and the principal factors of production, namely labor and capital, are mobile. Even in its most rudimentary form, the economic base model provides a reasonable explanation of the divergent economic paths of rural and urban America.

Richard S. Conway Jr.

Chapter 2. Economic Base Theory Empirical Evidence

Abstract

A sixty-year history of regional economic modeling, forecasting, and analysis in Washington state and the Puget Sound region reveals that the behavior of the state and regional economies is largely consistent with the economic base theory of regional growth. Various studies have shown that, because a region is “open” to its external economic environment, exports are a key to economic growth, people tend to follow jobs, and the unemployment rate, wage rates, and consumer prices are primarily determined in the national market.

Richard S. Conway Jr.

Regional Economic Models and Applications

Frontmatter

Chapter 3. Economic Base Model

Abstract

Of the tools used for regional forecasting and impact analysis, economic base models are among the simplest. Derived from the North-Tiebout theory of regional economic growth, economic base models are best suited for studying and forecasting the behavior of rural economies, which typically feature uncomplicated industrial structures. Despite their simplicity, economic base models are capable of predicting employment by industry, personal income, and population. This chapter focuses on an economic base study conducted in 2000 that estimated the economic impact of shutting down the Goldendale aluminum smelter in Klickitat County, Washington. The analysis involved four steps: collect data; construct an economic base model of the county; conduct the impact analysis; and assess the forecasting error associated with the estimated impact.

Richard S. Conway Jr.

Chapter 4. Input–Output Model

Abstract

Wassily Leontief, a winner of the Nobel Prize in Economic Sciences, has been called “the father of input–output analysis.” In the 1930s, striving to depict the interrelationships among the various segments of the U.S. economy, he and his associates constructed and analyzed national input–output tables for 1919 and 1929. Leontief’s classic book The Structure of American Economy, 1919–1929 was published in 1941. Twelve years later, Leontief and others authored Studies in the Structure of the American Economy. Of note was a chapter by Walter Isard entitled “Some Empirical Results and Problems of Regional Input–Output Analysis.” Between 1966 and 1977, a team of researchers led by Philip Bourque of the University of Washington and Eldon Weeks of Washington State University produced a unique series of survey-based regional input–output tables for the state. Focusing on the 1972 Washington input–output study for illustrative purposes, this chapter discusses the structure of regional input–output tables, the estimation of the input–output transactions, and the formulation of regional input–output models. The chapter concludes with an impact analysis—calculating the economic impact of professional baseball—the most common use of regional input–output models.

Richard S. Conway Jr.

Chapter 5. Interindustry Econometric Model

Abstract

Originally built in 1977, the Washington Projection and Simulation Model (WPSM) is a regional interindustry econometric model designed for forecasting and impact analysis. While remaining faithful to the economic base theory of regional growth, WPSM attempts to satisfy Tiebout’s desire for a model grounded in a “general theory of income determination.” Presented here is the fourth version of WPSM. It predicts 151 variables, including Gross State Product, personal consumption expenditures, residential and nonresidential investment, state and local government expenditures, exports (including federal government expenditures), imports, industrial output, employment, labor income, personal income, the unemployment rate, resident population, and the consumer price index. More than 40 studies have been conducted with WPSM. The majority of them have involved analyses of the key contributors to Washington’s economic base, such as Boeing, Microsoft, the forest products industry, the aluminum industry, and international trade. WPSM has been replicated in other places, most notably in Hawaii, where it is still in use four decades later, and the Chicago Region. This chapter describes the formulation of WPSM, analyzes the accuracy of the long-range forecasts prepared with the original version of the model, and evaluates the model’s simulation properties.

Richard S. Conway Jr.

Chapter 6. Structural Time-Series Model

Abstract

The Puget Sound Forecasting Model is a structural time-series model of the greater Seattle area. Its foremost objective is to produce accurate predictions. The model generates quarterly forecasts over two and ten-year periods. Since 1993 the forecasts have been reported in The Puget Sound Economic Forecaster, a quarterly newsletter on the regional economy. Principal variables predicted by the model include personal income, employment (18 categories), the unemployment rate, the consumer price index, population, retail sales, housing permits, the average home price, and the apartment vacancy rate. As a means of minimizing prediction error, the model combines a structural regression model (one with explanatory variables) with a time-series (ARIMA) model of the residuals.

Richard S. Conway Jr.

Regional Economic Case Studies

Frontmatter

Chapter 7. U. S. and World Economy

Abstract

The prosperity of a regional economy depends largely upon its ability to produce goods and services for export. This implies that the economic fate of the region hinges in no small way on the performance of the U.S. and foreign markets. Since the United States is the largest export market for most domestic regions, it is not surprising that regional economies tend to rise and fall with the national economy.

Richard S. Conway Jr.

Chapter 8. Regional Economic Behavior and Welfare

Abstract

This book has an empirical bent. Although the first section begins with a discussion of the economic base theory of regional growth, it quickly turns to a quantitative analysis of the theory’s basic tenets. The following case studies present empirical observations on various aspects of regional economic behavior and welfare. It is important to note how certain regional variables—employment, migration, population, unemployment rate, per capita income, and the consumer price index—are related not only to other regional variables but also to their U.S. counterparts.

Richard S. Conway Jr.

Chapter 9. Urban and Rural Economies

Abstract

It only takes one’s eyes to see that urban and rural economies are different. They vary in terms of size, isolation, topography, and industrial structure. While there are exceptions to the rule, urban economies have outperformed rural economies over time. A common problem with struggling rural economies is that they are dependent upon a single resource-based industry, such as agriculture, mining, and forestry.

Richard S. Conway Jr.

Chapter 10. Economic Cycles

Abstract

We have a tradition of naming the different stages of economic cycles: Roaring Twenties and the Great Depression, the Dot-Com Boom and Bust, and the Housing Bubble and the Great Recession. While this custom might seem curious, it is not surprising, since these points in time represent the best and worst that our economy has to offer. It would be beneficial to everyone—with perhaps the exception of speculators—to put a damper on economic cycles. But that would require a greater understanding of how our economy works than we seem to have.

Richard S. Conway Jr.

Chapter 11. Economic Policy

Abstract

Keeping a regional economy on the right track is difficult. When the economy becomes derailed, it is even harder to get it back on course. Because of the complexity of regional economies, it is not always clear what policies will help. Import substitution is an appealing idea when an economy is suffering a prolonged downturn, but does it work? Opponents to the $15 minimum wage argue that it costs jobs, but on balance is this a bad proposal? One thing for certain regarding regional economic policy, there is no shortage of ideas.

Richard S. Conway Jr.

Chapter 12. Regional Housing Market

Abstract

In 1977, Tom Howard, retired University of Denver finance professor, and I estimated a forecasting equation for Washington housing construction. It featured a sizable array of explanatory variables: population, per capita income, construction costs, credit availability, speculative demand, and housing stock. We published the research in the Journal of Regional Science. In spite of decades of study, I still have unanswered questions about the volatile housing market.

Richard S. Conway Jr.

Chapter 13. Regional Forecasting

Abstract

Players in a regional economy—workers, business owners, government officials—have a stake in the future. The only thing predictable about the road ahead is that it holds both opportunities and pitfalls. In order to prepare for either eventuality, it is incumbent upon the stakeholders to engage in regional forecasting. The only requirements for the task are data, a model, U.S. projections, and luck.

Richard S. Conway Jr.

Titel: Empirical Regional Economics
verfasst von: Dr. Richard S. Conway Jr.
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-76646-7
Print ISBN: 978-3-030-76645-0
DOI: https://doi.org/10.1007/978-3-030-76646-7