Abstract
The credibility that can be attached to information produced by regional analysts (i.e., export base and input-output multipliers), depends, in part, on the reasonableness of underlying assumptions. One of the assumptions is the uniformity of consumption patterns. Are consumption patterns uniform? The degree of spatial variation in consumption patterns in 1982 and 1987 at the state level is measured. An OLS regression model is specified to identify determinants of interstate variation in consumption. The empirical results indicate that in addition to variation in disposable income per capita, the age distribution of the population and tax effort are important determinants. Implications for state and local tax policy and economic development strategies are considered.
Highlights
This topic is relevant to regional analysts because we frequently assume consumption patterns to be uniform across spatial units
There is virtual unanimity among regional economists concerning the desirability of incorporating more regionally-specific information within computer-generated models." Brucker, Hastings, and Latham (1990, 122-24), in an assessment of five regional input-output models, indicate the importance of regionally-specific information by using as one basis for assessment: Does the model allow for user-supplied regionallyspecific consumption data?
The credibility that can be attached to the export-base and input-output multipliers produced by regional analysts depends, in part, on the reasonableness of underlying assumptions
Summary
This topic is relevant to regional analysts because we frequently assume consumption patterns to be uniform across spatial units (states and metropolitan areas). Conway (1990, 144-45) assumes in describing the Washington Projection and Simulation Model that Washington's household consumption patterns are fundamentally the same on a per capita basis as the United States and, uses consumption patterns from the gross national product accounts. The location quotient is used in input-output analysis as one nonsurvey method to obtain regional supply proportions, according to Miller and Blair (1985, 295-302). If a state or metropolitan area's consumption pattern is higher than the pattern of the unit used as a norm, a technique such as the location quotient will overstate the number of employees engaged in export activity.
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