Economic Base Model Research Articles

Book Reviews : BASIC Microcomputer Programs for Urban Analysis and Planning

John Ottensmann's elegant little book presents nine BASIC computer programs that implement standard models for urban planning and analysis. They include population trend and cohort-survival models, economic base models, shift-and-share models, input-output models, single-and-double constrained gravity models, and optimal facility location on planes and networks. Though the author's intended audience is planners in small agencies as well as planning students, the programs would be equally useful in such university social science departments as geography, economics, sociology, political science, and urban studies.

Forecasting Accuracy and Structural Stability of the Economic Base Model

Despite the forecasting and impact analysis emphasis, there have been no attempts to evaluate the economic base model on the basis of its predictions. Simply comparing the projections reported in impact studies with actual data may provide unreliable tests because the specified project may be only one of many sources of local area change. This paper examines the performance of the economic base model for four timber-dependent communities in the Pacific Northwest, using the accuracy of ex post forecasts and other statistical measures.

An export-base analysis of Louisiana's petroleum driven economy

Louisiana's economy has traditionally relied on industries that are intensive in natural resource utilization as the basis for economic growth. The dramatic energy price increases during the 1970s provided the incentives for this economy to increase its specialization in the mining and processing of petroleum-based products. A differential export-base model using ordinary least-squares (OLS) regression was developed in this paper for estimating aggregate employment multipliers. Results from the analysis indicate that oil and gas mining, chemical and petroleum manufacturing, and lumber and paper production are highly significant employment generators. Mining employment was estimated to be highly dependent on petroleum prices. By interfacing the employment demand equation with the economic base model, specific and general petroleum employment impacts are assessed. The current recession in the oil and gas mining industry is having a major impact on employment, income and public finances for this region.

Comparisons of Multipliers from Input-Output and Economic Base Models

Planning for regional growth and development often involves economic inpact analysis. Driving forces for most impact analyses are multipliers derived from input-output (I-0) or economic base models (Hushak 1979; Leistritz 1980; Pleeter 1980). Development of survey based 1-0 models incurs substantial costs and time. Increasingly, researchers have focused their attention on the development of nonsurvey I-0 models using various techniques to reduce a national model to a local level. Several researchers have then compared results of survey and nonsurvey models developed for the same area (e.g., Morrison 1974; Park 1981; Schaffer 1969; Stevens 1983). This article presents additional empirical comparisons of multipliers for three different models. Multipliers from a nonsurvey, simply constructed 1-0 model developed by the authors are compared with a semisurvey, intensively developed model; both of these models are for the entire state of Missouri in 1972. Second, the same nonsurvey model is used to estimate earnings multipliers for Missouri's nonmetropolitan counties in 1977-79. These are then compared with economic base multipliers for nonmetropolitan counties in a Midwest region. Implications for using these various sets of multipliers are noted, along with additional considerations for judiciously applying 1-0 multipliers.

Structural Differences and the Time Pattern of Basic Employment

Applied researchers are increasingly realizing that small-area impact models should be calibrated by survey-based data. This paper uses a comprehensive, cross-sectional data set to calibrate the economic base model for small communities. Four alternative ...

The Existence of Short-Run Economic Base Multipliers: Some New Empirical Evidence

Applied researchers are increasingly realizing that small-area impact models should be calibrated by survey-based data. This paper uses a comprehensive, cross-sectional data set to calibrate the economic base model for small communities. Four alternative ...

Application of an Economic Base Model for Community Planning: The Case of Killingly, Connecticut

Economic base studies are an accepted economic tool for regional economic analysis. The economic base concept was first set forth as early as 1928 in a regional study of New York City. The economic base concept gained maturity through the work of Homer Hoyt in the 1930's. The first complete statement of the theory of economic base is contained in a text written by Weiner and Hoyt.

Estimating Export Activity in a Regional Economy: A Theoretical and Empirical Analysis of Alternative Methods

Four methods of estimating exports are widely used in regional analysis, particularly with the economic base model. The theoretical rationales for each are examined. An interpretation of the minimum requirement method is offered which solves the oft-noted, non-importation problem. The difference between the minimum requirement and location quotient estimates is proven not to be an estimate of imports as is widely believed, and a relatively new econometric method is shown to over-estimate exports. Estimates of exports are calculated for 101 metropolitan areas in the United States. Both theoretical and empirical evidence indicates that the location quotient method underestimates, yet the minimum requirement method produced lower estimates for 22 areas. The results suggest that the choice of estimation method may affect the results of sub-sequent analyses.

The Employment Sector of a Regional Policy Simulation Model

D ESPITE the rapid development of techniques of regional economic analysis during the past fifteen years, most regional models have continued to focus upon selected aspects of the regional economy rather than upon its totality. Economic base models and regional input-output models have concentrated upon the relationships between the output and employment in the export sectors and the local sectors;' comparative cost models have concentrated upon the response of the export sectors to changes in relative regional production costs;2 and regional econometric models have concentrated upon the determinants of employment in the export sectors and the relationships between regional economic activity and that of the nation.3 This disparate collection of partial-equilibrium models generally does not make it possible to determine the full general-equilibrium effects of a given economic change on the total regional economy. For example, although economic base/input-output models permit the estimation of the indirect and induced employment and output effects arising from a change in final demand or the level of activity in the export sector, they treat the level of activity in the export sector as exogenous and do not permit factor substitution. Similarly, although comparative cost models explicitly recognize that the location of export industries is largely determined by relative production costs, they do not consider the interrelationships among the industries within the export and local sectors or the role that factor substitution can play in regional employment levels. Finally, although regional econometric models generally use a neoclassical labor demand function, and hence explicitly consider factor substitution, they do not fully differentiate between the factor-substitution and production cost effects of a change in regional input prices. Furthermore, they do not account for the full set of linkages among the industries in the export and local sectors. The growing need for comprehensive regional models for planning and policy analysis suggests that there would be substantial value in having models that synthesize the relevant aspects of existing regional economic theory into a single integrated construct. Such an integrated model would be useful for both forecasting and policy evaluation and should include the following fea-. tures: First, it should recognize that factor substitution is possible and that an increase in the regional price of any given factor will tend to cause substitution in favor of other factors (the factorsubstitution effect); Second, it should recognize that an increase in any input price in a region relative to that in other regions will tend to increase production costs in the region in question. The result will be a reduction in the comparative locational advantage for the affected region and a tendency toward a relative shift in employment in national-market industries away from that region to lower-cost regions (the location effect); Third, it should be able to quantify the relative magnitudes of the factor-substitution effect and the location effect arising from any given change in regional input prices; Fourth, it should recognize that a complex set of interrelationships exists not only between the export sector and the local sector, but also among the various industries within each sector. Received for publication May 17, 1978. Revision accepted for publication December 7, 1978. * University of Massachusetts at Amherst, Massachusetts Institute of Technology, and Regional Science Research Institute, respectively. Work on this model has been supported by the Commonwealth of Massachusetts. The authors are grateful to Edward M. McNertney for contributions to the development and estimation of many of the equations and to Roy E. Williams for a mathematical and statistical review of the model and for programming the model. ' See, for example, Isard (1960), Tiebout (1962), Bourque et al. (1967), Miernyk (1970), and Polenske (1974). 2 See, for example, Weber (1928), Hoover (1937), Isard (1956) and Borts and Stein (1964). 3See, for example, Friedlaender et al. (1975), Adams et al. (1976), and Glickman (1977).

An application of the transfer function to an economic-base model

The purpose of this paper is to demonstrate a statistical method, the transfer function, that may be useful to urban and regional modeling. An economic-base approach is used to model employment for Benton and Franklin Counties of Washington State. The dynamic structure between the dependent and independent variables is delineated using the transfer function. Thus, a greater understanding of the interrelationship between the time series is provided and more accurate analysis of economic impacts is assured.

Regional Multiplier Analysis: A Demometric Approach

This paper reports on the design and testing of an adequate framework for conducting regional multiplier studies in areas experiencing rapid population growth. It puts forward the demometric approach, one that applies econometric methods to the analysis of demoeconomic growth. Two alternative models are proposed here. The first is an aggregate model presenting a demometric revision of the traditional economic-base model. The second model, an enlarged version of the first, is characterized by a breakdown of economic activities into nine major sectors. Both models are fitted to data for the rapidly growing metropolitan area of Tucson, Arizona, USA. They are then used to derive tentative impact and dynamic multipliers which substantiate the role of households as consumers and suppliers of labor in the development of the Tucson Standard Metropolitan Statistical Area (SMSA). The major finding is that, for the same level of resources, the second model yields better policy implications than the modified (and therefore also than the traditional) economic-base model.

A Test of the Time Dimension in Economic Base Analysis

Applied researchers are increasingly realizing that small-area impact models should be calibrated by survey-based data. This paper uses a comprehensive, cross-sectional data set to calibrate the economic base model for small communities. Four alternative ...

A Consistent Least Squares Estimator of the Economic Base Multiplier with Measurement Errors in the Export Coefficients

Empirical estimations of the regional multiplier have been abundant in the literature of regional studies for many years. There have been traditionally two general approaches to the study of regional multipliers; one using the input-output model and the other the economic base approach. However, a large number of structural simultaneous equation models, which have been used primarily at the level of national economy, have been recently constructed and estimated to analyze many regional economic problems, including regional multiplier effects. Although input-output and regional macroeconomic models introduce a high degree of sophistication and comprehensiveness, the construction of such regional models usually entails high costs and complex data problems, especially in the case of a complete interindustry model. These difficulties seem to have led many investigators to use less costly and simpler economic base models.

Economic base and input-output multipliers a comparison for Vancouver, B. C.

Employment multipliers for the metropolitan economy of Vancouver are derived from both economic base and input-out-put models of the region. The principal shortcomings of the location quotient approach in delineating the economic base of a region are reviewed, and empirical estimates are made of the understatement of exports resulting from this approach in light of survey data. The survey data and the author's judgment are then employed to yield a base employment multiplier of 1.99 for the region. Sectoral input-output employment multipliers are presented and conditions are derived under which an aggregated I-O multiplier is equal to the multiplier associated with the economic base model.

Exports and Regional Economic Growth: An Evaluation of the Economic Base and Staple Models

Exports and Regional Economic Growth: An Evaluation of the Economic Base and Staple Models