Forecasting, impact analysis and uncertainty propagation in regional integrated models: A case study of Australia

Abstract

The integration of input–output and econometric models at regional level has gained popularity for its superior performance in forecasting employment and examining the impacts of policies. There are a number of approaches to integrate the two models. This paper examines the integration of input–output with econometric modelling using two merging methodologies, namely coupling and holistic embedding. Each methodology is analysed with respect to the accuracy of its results of total and sectoral employment forecasting. Both methodologies are applied to a regional economy in Australia. The methodology which shows superior forecasting accuracy is applied to examine the significance of sectors that generate the highest number of employments relative to other sectors.