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The University of Illinois at Urbana-Champaign

contact info

Director
Geoffrey J. D. Hewings
hewings@illinois.edu
Location
607 S. Mathews,
Room 318, M/C 151
Urbana, IL 61801-3671
Phone/Fax
217-333-4740 (phone)
217-244-9339 (fax)

Abstracts of Discussion Papers: Technical Series 1994-99


(Note: Only papers published after 1994 are available)


[1999] [1998] [1997] [1996] [1995] [1994]


REAL 99-T-1
STATE INTERACTION AND GROWTH: THE CASE OF THE BRAZILIAN NORTHEAST
André Magalhães, Michael Sonis and Geoffrey J.D. Hewings

Abstract: Determining the extent and direction of spatial correlation among states within a region can be very important in interpreting the success of a given regional policy. Modeling such correlation is, however, not an easy task. In this paper, two different econometric models are estimated for the Northeast of Brazil. The first model is a space-time model that makes use of a spatial weight matrix, and in which the choice of the weights is make ex-ante. The second model is the Dendrinos-Sonis (D-S) model used by Hewings et al. (1996). In this model the weight matrix is not required, and the data are transformed to shares of gross regional product. The results of the first model reveal the presence of spatial correlation in the region, while the results for the D-S model are affected by the presence of multicollinearity in the data, which increases the standard errors of the coefficients. Even assuming that the D-S model shows a lack of spatial interaction within the region, the results, although different, are not contradictory in the sense that the two models are dealing with different level of details of spatial correlation. However, further investigation is necessary to determine the nature and intensity of any possible spatial interaction existent in the region.

REAL 99-T-2
CREATING AND EXPANDING TRADE PARTNERSHIPS WITHIN THE CHICAGO METROPOLITAN AREA: APPLICATIONS USING A MIYAZAWA ACCOUNTING SYSTEM
Yasuhide Okuyama, Michael Sonis and Geoffrey J.D. Hewings

Abstract: The ideas and approaches adopted in understanding how regions within a country or countries themselves are linked with each other are used to explore the complex interdependencies that exist within the Chicago metropolitan area (hereafter, Chicago). The methodology that has been developed will form the basis for analysis that can explore the benefits to all parts of the area from economic initiatives generated in one region and begin to provide the basis for the notion that the gains from free trade that are promoted at the international level can also be realized within metropolitan areas. The analysis will be based in part on two models ­ a comprehensive econometric-input-output model for Chicago and a Miyazawa-styled social accounting system for a four-fold division of this area (see Hewings et al., 1999, for a collection of papers illustrating applications of the Miyazawa framework). Given time constraints and lack of reliable data, a full social accounting system could not be developed; however, for the clients' needs, the addition of income flows proved to be the single most valuable source of additional information beyond that provided in standard input-output models. The research was provided to a Chicago organization that has been primarily focused on enhancing economic development in parts of the region in which a large percentage of the residents are either African-American or Hispanic. There were three major objectives: (1) Analysis of the nature and strength of existing economic interdependence between four regions in Chicago, with particularly attention directed to predominantly minority areas on the south and west parts of the city of Chicago; (2) Assessment of the potential gains to all regions from economic development within either of the two targeted regions; and (3) Identification of existing impediments to further trade expansion.

REAL 99-T-3
ECONOMIC INTERDEPENDENCE WITHIN THE CHICAGO METROPOLITAN REGION: A MIYAZAWA ANALYSIS
Geoffrey J.D. Hewings,Yasuhide Okuyama, and Michael Sonis

Abstract: The present study aims to broaden the analytical tradition of economic interdependence in a metropolitan area by analyzing the economic structure among the regions (cities and suburbs). Employing Miyazawa's extended interregional input-output framework, the model constructed in this study enables investigation of the interdependency of income formation and output generation. The Chicago metropolitan region is divided into four areas with particular attention directed to predominantly minority areas on the south and west parts of the city of Chicago. With the emergence of a hollowing-out process in the metropolitan economy (Hewings et al., 1998b), this study offers empirical evidence of the interdependence between the city and suburbs, and indicates that interindustry analysis is particularly important for research in this area.

REAL 99-T-4
DYNAMIC R&D WITH RANDOM SPILLOVERS, INCENTIVES AND FINANCIAL CONSTRAINTS
Faysal Mansouri, Mohamed Jeddy and Geoffrey J. D. Hewings

Abstract: This paper develops dynamic R&D games that emphasize the role of random knowledge externalities and financial constraints in the provision of innovation efforts. We show that an increase in cost-reducing R&D by a firm unambiguously increases the equilibrium output of that firm and that the aggregate industry output depends upon the realization of the spillover rate. If goods are substitutes, and for larger knowledge externalities, each firm tends to lower its output level if its competitor increases its innovation effort. For perfectly substitute goods, and when R&D efficiency level is low, cooperation in R&D yields excessive R&D investment compared to what is socially desirable. Finally, there exists an appropriate profit distribution rule that provides sufficient incentives to managers to increase their innovation efforts. Also, we find that the higher the R&D spillover the lower the incentives to profit maximization.

REAL 99-T-5
VERTICAL SPECIALIZATION AND INTERREGIONAL TRADE: TURBULENCE ANALOGY AND FEEDBACK LOOPS ANALYSIS OF THE MIDWEST ECONOMY
Michael Sonis, Geoffrey J.D. Hewings and Yasuhide Okuyama

Abstract: While there would be every reason to expect the volume of interregional trade to account for a larger share of any region's GRP than a corresponding relationship between international trade and GDP at the national level, little is known about the spatial and functional structure of interregional trade. In this paper, turbulence analogy in the form ofthe feedback loop analysis is used as a way of uncovering the fine structure of interaction between region. It is shown that the commonly used ideas of vertical specialization are but one component of the nature of interregional trade. Application is made to a six-region division of the United States in which the primary focus is on the Midwest states of Wisconsin, Illinois, Indiana, Ohio and Michigan with the Rest of the US comprising the sixth region. The data source is a combination of Commodity Flow Statistics and estimates made by the authors.

REAL 99-T-6
STRUCTURAL CHANGE IN THE KOREAN ECONOMY BETWEEN 1975 AND 1995
Byungdo Cho, Jungyul Sohn and Geoffrey J. D. Hewings

Abstract: The Korean economy has been considered as one of the successful models of economic development up to the mid 1990s. It was characterized by rapid growth during the 1970s and 1980s, a period in which there was significant government intervention and very pro-development policies. This paper examines the structural change of Korean economy, especially focusing on the interrelationships between economic sectors using a set of consistently defined input-output tables. The analysis will be performed for the period between 1975 and 1995, during which some dramatic and dynamic development patterns have been observed. The analysis first focuses structural change at a three sector level (agriculture, manufacturing and service) applying some modified decomposition techniques. Thereafter, the overall economic landscape of 17 sectors will be examined using the multiplier product matrix method. By looking at the forward and backward linkages between these 17 sectors, some key sectors and their changing hierarchies are analyzed and discussed. In this fashion, some new insights into the structural changes in the economy can be revealed.

REAL 99-T-7
THE ROLE OF INTRAINDUSTRY TRADE IN INTERREGIONAL TRADE IN THE MIDWEST OF THE US
Darla K. Anderson and Geoffrey J. D. Hewings

Abstract: In the past two decades, the theoretical underpinnings of new trade theory have taken hold. In particular, the study of market structure, imperfect competition, and intraindustry trade has become increasingly important. This new realm of trade research can also make an important contribution to the study of regional trade, or trade within countries. In this paper, trade among five U.S. states (Illinois, Indiana, Michigan, Ohio and Wisconsin) is reviewed. It is shown that some of the hypothesized determinants of international intraindustry trade are relevant for this region. In addition, some descriptive measures of the extent of intraindustry trade, including the Grubel-Lloyd index of trade overlap, also point to the importance of trade within this region. Some key sectors which internationally exhibit a high degree of vertically integrated trade are examined. Finally, considerations for future study and policy implications are considered.

REAL 99-T-8
REGIONAL COMPETITION AND COMPLEMENTARITY REFLECTED IN RELATIVE REGIONAL DYNAMICS AND GROWTH OF GSP: A COMPARATIVE ANALYSIS OF THE NORTHEAST OF BRAZIL AND THE MIDWEST STATES OF THE U.S.
André Magalhães, Michael Sonis and Geoffrey J.D. Hewings

Abstract: Determining the extent and direction of spatial correlation reflecting economic competition and/or complementarity among states within a region can be very important in interpreting the success of a given regional policy. Modeling such correlation is, however, not an easy task. In this paper, the Dendrinos-Sonis (D-S) model of relative social spatial dynamics is applied to two distinct regions: the Northeast of Brazil and the Great of Lakes of the U.S. The model is applied to shares of the states in their respective gross regional products. The results show a stronger degree of spatial interaction within the Midwest states than within the Northeast. Within the Midwest, Michigan and Indiana were the states with strongest influence. In the Northeast the dynamics are mostly concentrated among the smallest states. The forecast exercises show that both regions tend quickly to the steady state attractor. The model predicts changes in the relative distribution of the gross regional product in the Northeast. No change is predicted in for the Midwest where further analysis revealed the connection of states' shares with interregional trade.

REAL 99-T-9
REFUGEES ARE NOT IMMIGRANTS: DEMOGRAPHIC ISSUES AND IMPLICATIONS IN THE ANALYSIS OF FOREIGN-BORN POPULATIONS.
K. Bruce Newbold

Abstract: Typically referred to in the aggregate, immigrants and the non-permanent population within Canada are likely to embody important differences with respect to language abilities, labor market participation, and skill level amongst other attributes owing to differences in period of arrival and immigration policy. Consequently, there should be systematic differences according to both immigrant status and arrival time between these two groups. The purpose of this paper is to extend our understanding of immigration, migration, and settlement within the foreign-born population. Using data from the 1996 Canadian census, the following paper explores the differences between immigrants and non-permanent residents in terms of personal attributes, geographic distribution, and mobility.

REAL 99-T-10
TURBULENCE ANALOGY FOR FEEDBACK LOOPS ANALYSIS OF INTERREGIONAL TRADE: CASE STUDY OF THE JAPANESE ECONOMY, 1980-85-90
Michael Sonis, Geoffrey J. D. Hewings and Yasuhide Okuyama

Abstract: This paper illustrates the use of a turbulence analogy from the whirlpool structure of atmosphere disturbances to the horizontal and vertical specifications of intra- and inter-regional trade flows. Such an analogy faciliates the interpretation of the feedback loops superposition analysis of trade feedbacks reflecting the economic phenomena of horizontal and vertical trade specifications. Moreover, the visualization of this process is achieved through the visualization of the different permutation matrices presenting the hierarchy of trade feedback loops. In this manner the qualitative presentation of Japan inter-regional and inter-industry trade, 1980-85-90 may be interpreted.

 

[1999] [1998] [1997] [1996] [1995] [1994]

REAL 98-T-1
A DYNAMIC MODEL FOR MIGRATION IN DEVELOPING COUNTRIES
Patricio Aroca and Geoffrey J.D. Hewings

Abstract: Migration decision-making in developing economies is addressed from the perspective of status in the labor force (unemployed or unemployed) and traditional concerns with utility maximization are expanded to include the role of assets and access to capital markets. A dynamic model is formulated and the results reveal that the migration mechanism is efficient when workers have access to borrowing from financial institutions; without this access, migration is shown to be inefficient, a fact exacerbated when consideration is directed to unemployed/poor workers in less prosperous regions.

REAL 98-T-2
LABOR MARKET ADJUSTMENT AND REGIONAL GROWTH IN CHILE, 1982-1992
Patricio Aroca and Geoffrey J.D. Hewings

Abstract: The main objective of this paper is to evaluate the migration processes that have been observed in Chile between 1982 and 1992, as a market mechanism to re-allocate labor among regions. Using traditional consumer theory, we first develop a model for a migrant who is evaluating migration. Secondly, we estimate the model, with cross section data, for 1982 and 1992 using a logit model formulation. The empirical analysis reveals that there is still a strong force in the Chilean regional labor market which concentrates the workers around the largest populated region of the country, although the behavior of some other regional labor markets suggests that some important changes have taken place between 1982 and 1992.
[Printed in: The Annals of Regional Science, 2002, vol. 36, 2:197-218]

REAL 98-T-3
ADJUSTMENT AND EXTRACTION OF INPUT-OUTPUT COEFFICIENTS IN AN ECONOMETRIC INPUT-OUTPUT MODEL
Philip R. Israilevich, Geoffrey J.D. Hewings, Michael Sonis, Yasuhide Okuyama, and Graham R. Schindler

Abstract: The well-known biproportional adjustment procedure has been widely used to generate input-output tables at the regional level from other regional or national tables as well as to adjust tables developed at one time period for another time period. In this paper, an innovative adjustment procedure is illustrated that adopts some of the ideas and conventions of the biproportional methodology but within an expanded context. Underlying the Chicago Region Econometric Input-Output model is a set of input-output relationships; Israilevich et al. (1996) developed a procedure to extract input-output coefficients from years in which no survey data exist. Using the properties of a Marshallian quantity-adjusted general equilibrium model, the model solves to clear markets (in quantity terms) through the adjustment of the input-output coefficients. These adjustments are not observed directly but the associated Leontief inverse matrix may be extracted from the equation system and the direct coefficients and gross flows matrices calculated accordingly. As a result, a set of annual tables for the region has been generated for the period 1975-2018. In this paper, some of the formal properties of these tables will be examined together with the underlying theoretical and methodological bases for their calculation. Tests will be conducted to explore the degree to which the tables can be considered to exhibit biproportional tendencies, broadly defined.

REAL 98-T-4
FEEDBACKS IN INPUT-OUTPUT SYSTEMS: IMPACTS, LOOPS AND HIERARCHIES
Michael Sonis and Geoffrey J.D. Hewings

Abstract. Miller's work generated considerable interest in the role and nature of interregional feedback effects; while his major concern was with the consequences of ignoring these impacts, subsequent work has begun to explore the spatial paths along which these feedback effects travel in multiregional input-output and social accounting systems. In this paper, approaches using feedback loop analysis, superposition and Matrioshka principles are presented and a link between these perspectives and Miller's work is revealed. Empirical illustrations range from a four-region US system, to the European Union, the Asian economies and interregional models for Indonesia and Bangladesh.

REAL 98-T-5
HIERARCHICAL FIELDS OF INFLUENCE OF SPATIAL EXCHANGE
Nuzul Achjar, Geoffrey J.D. Hewings and Michael Sonis

Abstract: In the 1970s, Lakshmanan was involved in the development of a set of complex interregional models for the US economy. In this paper, we draw attention to some of the important characteristics of the spatial pattern of exchange characterizing economies, expanding and elaborating upon the initial formulation embodied in the notion of a field of influence of change. In particular, attention is drawn to the nature of internal (to the region) and external sources of change and their impacts; these formulations are interpreted through an hierarchical inclusion process that examines the nature and strength of the implicit network properties inherent in the exchange of goods and services over space. The focus of attention will be on the micro-level of economic sectors incorporated into the block-matrix fields of influence within the meso-level of economic subsystems; application is made to the interregional economies of Indonesia to explore commonalties and differences in the nature of spatial exchange across five macro regions.

REAL 98-T-6
FRAME SHIFTING IN REGIONAL GENERAL EQUILIBRIUM MODELS
Philip R. Israilevich

Abstract: In CGE (computable general equilibrium models), input-output coefficients are balanced row-wise as a supply-demand balance of physical products. A vector of prices allows calibrations of column-wise balance thus equilibrating sales and income. An alternative approach is provided by the regional econometric input-output [REIM] models initially developed by Conway. These models are based on the Marshallian equilibrium of outputs, where prices are not explicitly considered. Thus, in these models, there is no column equilibration due to the absence of prices. In this paper it is argued that column-wise balance is achieved in CGE due to the assumption that the input-output represents physical values. However, in reality, input-output coefficients are shares of revenues (since the assumption of physical coefficients is impractical) and hence, only unit prices can equilibrate the input-output model. Therefore, CGE prices are redundant. In addition, CGE assumes input-output coefficients are fixed over time. A different functional relationship between input-output coefficients and prices is offered. These relationships allow column-wise balance with prices non-linearly related to outputs. In this approach, input-output coefficients change over time and are function of prices. Researchers can use the proposed approach in both REIM type models and CGE.

REAL 98-T-7
INTERNATIONAL MIGRATION, RISK AVERSION, AND ASYMMETRIC INFORMATION: EMPIRICAL EVIDENCE USING A NESTED LOGIT MODEL
Hassen M'zali and Fayçal Mansouri and Geoffrey J.D. Hewings

Abstract: This research work attempts to analyze migration decisions under incomplete information and risk aversion regimes. Particularly, we propose a microeconometric model capturing and testing for the effects of risk and asymmetry of information on international migration decisions. The main works in the domain are mainly due to Stark (1984), (1991) and Viswanath (1991), Stillwel and Congdon (1991). Our work extends the studies of Falaris (1987) and Liaw (1988) to external migration. In addition, the major difference lies in the microeconometric structure of our study, namely the focus on individual migrant characteristics, and the incorporation of the effects of risk aversion and asymmetry of information parameters. Indeed, we suppose that income formation in the country of origin is risky and the potential migrant holds a quantity of private information related to his qualifications. A nested logit model is proposed to take into account the sequentiality in the international migration decision process based on a major migration survey data on 3052 emigrants from Tunisia. Our results tend to confirm the relationship between migration probability, asymmetry of information and risk aversion. Migrants with low qualifications, not being self employed individuals, with no stable employment and located rather in the center or the south of the country have more incentives to migrate abroad.

REAL 98-T-8
REGULATION AND COORDINATION OF INTERNATIONAL ENVIRONMENTAL EXTERNALITIES WITH INCOMPLETE INFORMATION AND COSTLY PUBLIC FUNDS
Faysal Mansouri and Slim Ben Youssef

Abstract : This research work deals with coordination in the case of international environmental externalities, as well as with the solutions envisaged to resolve them. The main works in the domain are due to Carraro-Siniscalco (1994), Ploeg-De Zeeuw (1992) and Chander-Tulkens (1992). We propose a new approach for modeling coordination between regulators by means of multiprincipals theory (Martimort, 1992), for the cases of complete and incomplete information. In our model, firms produce with pollution strategic complement or substitute goods, sold on a common market, and are regulated with costly public funds. We show the necessity of cooperation between competing regulators as a mechanism of effective internalization of all the damages caused to the environment, while reaching Pareto-optimal levels. The presence of informational asymmetries lead to a multiplicity of equilibria necessitating regulators to agree on a predetermined equilibrium state, giving them, hence, incentives to cooperate. For competing regulators and in the absence of transfrontier pollution, the complete information state is welfare improving with respect to that of incomplete information, the reverse may be true with transfrontier pollution. Cooperating regulators prefer complete information situation.
[Printed in: Journal of Public Economic Theory, 2000, vol.  2, 3:365-388]

REAL 98-T-9
ECONOMIC LANDSCAPES: MULTIPLIER PRODUCT MATRIX ANALYSIS FOR MULTIREGIONAL INPUT-OUTPUT SYSTEMS
Michael Sonis and Geoffrey J.D. Hewings

Abstract: Earlier work (Sonis and Hewings, 1993, 1995; Sonis, Hewings and Miyazawa 1997a) has explored new ways of examining the structure of regional economies using input-output and social accounting systems. In this paper, attention is focused on a new approach to the interpretation of Miyazawa's concepts of left and right multipliers in the decomposition of multiregional input-output systems. Using the technique of the multiplier product matrix (Sonis et al., 1997c), the hierarchical decomposition proposed exploits the insights offered by the fields of influence theory and provides a way of interpreting Miyazawa's left and right multipliers in terms of multiregional feedback loops.

REAL 98-T-10
LDU-FACTORIZATION OF THE LEONTIEF INVERSE, MIYAZAWA INCOME MULTIPLIERS FOR MULTIREGIONAL SYSTEMS AND EXTENDED MULTIREGIONAL DEMO-ECONOMIC ANALYSIS
Michael Sonis and Geoffrey J.D. Hewings

Abstract: A new triple LDU-factorization (L represents a lower-triangular block matrix, D represents the diagonal block matrix and U represents an upper-triangular block matrix) of the Leontief inverse is based on the Schur block-inversion of matrices. This factorization is applied to the decomposition of Miyazawa-type multipliers of income formation within the multiregional system and to the further elaboration in the extended demo-economic multiregional input-output analysis.

REAL 98-T-11
INPUT-OUTPUT SYSTEMS IN REGIONAL AND INTERREGIONAL CGE MODELING
Eduardo Haddad, Geoffrey Hewings and Matthew Peter

Abstract: In this paper, we investigate the role of input-output data sources in regional and interregional CGE models. While there has been a great deal of experimentation focused on the accuracy of alternative methods for estimating regional input-output coefficients, little attention has been directed to the role of accuracy when the input-output system is nested within a broader accounting framework. The pioneering work developed by Israilevich et al. (1996) considered this issue using a quantity-adjustment process in a regional general equilibrium model. The issues of accuracy are considered in the context of impact analysis focusing on a Walrasian (price-adjustment process) model developed for Brazil. The choice of the input-output table embedded in the interregional CGE is evaluated and comparisons with previous findings using a Marshallian approach (quantity-adjusted results) are provided.

REAL 98-T-12
BI-PROPORTIONAL PROPERTIES OF THE ADJUSTMENT AND EXTRACTION OF INPUT-OUTPUT COEFFICIENTS IN AN ECONOMETRIC INPUT-OUTPUT MODEL
Philip R. Israilevich, Geoffrey J.D. Hewings, Michael Sonis, Yasuhide Okuyama and Graham R. Schindler

Abstract: The well-known bi-proportional adjustment procedure has been widely used to generate input-output tables at the regional level from other regional or national tables as well as to update tables. In this paper, an innovative adjustment procedure is illustrated that adopts some of the ideas and conventions of the bi-proportional methodology but within an expanded context. Within the Chicago Region Econometric Input-Output model is a set of input-output relationships that have been extracted analytically for the period 1975-2018. In this paper, some of the formal properties of these tables will be examined together with the underlying theoretical and methodological bases for their calculation. Tests will be conducted to explore the degree to which the tables can be considered to exhibit predictable bi-proportional tendencies such that once a relationship between any two tables is known, all other tables can be generated. The empirical evidence for Chicago suggests that the adjustment process is more complex such that the complete econometric-input-output model is needed to estimate the time series of tables.

REAL 98-T-13
AN EXTENSION OF THE BLOCK SPATIAL PATH APPROACH TO ANALYSIS OF THE INFLUENCE IN SOCIAL ACCOUNTING AND INPUT-OUTPUT MODELS
Russel J. Cooper

REAL 98-T-14
ON THE ASSIMILATION OF REGIONAL SAMPLE INFORMATION INTO REGIONAL INPUT-OUTPUT MODELS RELYING ON NATIONAL INPUT-OUTPUT DATA
Russel J. Cooper

 

[1999] [1998] [1997] [1996] [1995] [1994]

REAL 97-T-1
ECONOMIC COMPLEXITY AS NETWORK COMPLICATION: MULTIREGIONAL INPUT-OUTPUT STRUCTURAL PATH ANALYSIS
Michael Sonis and Geoffrey J.D. Hewings, (January, 1997)

Abstract: This paper presents a description of some fundamental properties of networks of economic self-influence and transfer of economic influence within hierarchies of economic sub-systems using structural path analysis within a multiregional input-output system. In this fashion, exchange between sectors is viewed as a network that can be decomposed hierarchically; economic complexity is viewed as an emerging property of the process of network complication that accompanies the augmentation of inputs at the meso-level of regions and the growing synergetic interactions between regional sub-systems. It is expected that this analysis will provide a methodology that will be useful in understanding regional economic sustainability (i.e., spatial and temporal invariability), structural stability and structural changes in economic networks as well as providing insights into the role of internal and external trade between regions. To support this expectation, the detailed theoretical analysis of the block structural paths in the social accounting system is presented supplemented by economic analysis of the Indonesian social accounting matrices for 1975, 1980 and 1985.

REAL 97-T-2
INTERDEPENDENCE, LINKAGES AND MULTIPLIERS IN ASIA: AN INTERNATIONAL INPUT-OUTPUT ANALYSIS
Joaquim J.M. Guilhoto, Geoffrey J.D. Hewings and Michael Sonis (October, 1997)

Abstract: Using a set of international input-output tables constructed for selected Asian countries and the US for 1975 and 1985, analysis is conducted to compare how the various country and sector interactions varied over the ten year period. The framework for analysis was developed by Guilhoto et al. (1996), drawing on extensions to the key sector and pure linkage analysis literatures and some of the concerns of Miyazawa and his distinction between internal and external multipliers. Attention is focused on the degree to which individual countries' dependence - in both a forward and backward sense - has changed, as a way of identifying the response of each economy to external trade.

REAL 97-T-3
LESSONS FROM US AIRLINE DEREGULATION
Tatsuo Kinugasa (October, 1997)

Abstract: The airline industry was one of the first industries to undergo deregulation worldwide. Especially in the US, airline deregulation policy has been far-reaching and has affected the entire monopolistic structure of carriers. Studies by academic economists in the US have been a significant force in the movement towards deregulation of the US domestic airline industry since the early 1970s. This paper reviews the results of deregulation in the US airline industry and performs a productivity analysis using total factor productivity approaches. From the results, it is concluded that TFP fluctuated after deregulation and that the long-run equilibrium in the airline industry is still not clear.

REAL 97-T-4
REGIONAL INEQUALITY AND STRUCTURAL CHANGES IN THE BRAZILIAN ECONOMY
Eduardo Haddad and Geoffrey J.D. Hewings

Abstract: This paper illustrates alternative methodological approaches to the issue of trade and interdependence in the economic growth process with a focus on the countries of Latin America, drawing inspiration from earlier contributions by Machlup, Goodwin and Miyazawa. The World economy is divided into two main blocks of countries (Latin America and a selection of developed economies) with the rest of the world forming an aggregated third block. A time series of trade matrices for the period 1978-1991 have been constructed to explore the degree to which changes in one country spill-over to the rest of the world and the degree to which the changes are symmetric or asymmetric. The approaches reveal that important insights into trade structure can be obtained, insights that will prove of value in the rapidly changing trade regimes of the current and next decades.

REAL 97-T-5
THE THEORETICAL SPECIFICATION OF B-MARIA
Eduardo Haddad and Geoffrey J.D. Hewings

Abstract: The Brazilian Multisectoral And Regional/Interregional Analysis Model (B-MARIA) is the first fully operational interregional CGE model for Brazil. The model is based on the MONASH-MRF model which is the latest development in the ORANI suite of CGE models of the Australian economy. B-MARIA contains over 240,000 equations and is currently used for policy analysis. Agents' behavior is modeled at the regional level, accommodating variations in the structure of regional economies. The model recognizes the economies of three regions - North, Northeast and Center South (Rest of Brazil). Results are based on a bottom-up approach - national results are obtained from the aggregation of regional results. Forty sectors and commodities are identified in each region. In this paper, the full specification of the model is documented.

 

[1999] [1998] [1997] [1996] [1995] [1994]

REAL 96-T-1
THE HOLLOWING OUT PROCESS IN THE CHICAGO ECONOMY, 1975-2010
Michael Sonis, Geoffrey J.D. Hewings, Jiemin Guo, Philip Israilevich, and Graham R. Schindler (April, 1996)

Abstract: The metropolitan economy of Chicago has experienced a significant transformation in its economic structure over the past twenty years. Using a method for extraction of input-output tables that has been described elsewhere, it has been possible to produce an economic photograph of the Chicago region, annually, for the period 1975-2010. This paper explores the nature of these structural changes through examination of the changes in the composition of the Leontief multipliers and changes in the economic landscapes interpreted through application of the multiplier product matrix. The resulting picture reveals a hollowing out process, with intra-metropolitan dependence replaced by dependence on sources of supply and demand outside the region. Furthermore, the analysis reveals a complex internal transformation, as dependence on locally sourced manufacturing inputs is replaced by dependence on local service activities. The applications are conducted with a 9-sector version of the economy and thus they reveal a meso sectoral view of change.

REAL 96-T-2
THE EXPORT-OCCUPATION INTERFACE: THE CHICAGO EXPERIENCE
Philip R. Israilevich, Graham R. Schindler and Geoffrey J.D. Hewings (April, 1996)

Abstract: This paper uses the Chicago region econometric input-output model to examine the nature and strength of dependencies on international exports of different sectors in the region. Attention is focused on employment generation, both directly and indirectly, by export activity over the next decade. Notwithstanding growth in international exports, employment generation is expected to fall in large part because of significant gains in productivity in the internationally competitive export sectors. Further, the notion of occupational capital is advanced as one of the main reasons underlying the competitive advantage of a region's economy in global trading.

REAL 96-T-3
SYNERGETIC INTERACTIONS WITHIN THE PAIR-WISE HIERARCHY OF ECONOMIC LINKAGES SUB-SYSTEMS
Michael Sonis, Geoffrey J.D. Hewings, and Ken'ichi Miyazawa (April, 1996)

Abstract: This paper clarifies and extends Miyazawa's suggestion to classify the types of synergetic interactions within the preset pair-wise hierarchy of economic linkages sub-systems. Such a classification is based on a partitioned input-output system and exploits techniques that produce left and right matrix multipliers for the Leontief Inverse.
[Printed in Hitotsubashi Journal of Economics, 1997]

REAL 96-T-4
THE TEMPORAL LEONTIEF INVERSE
Michael Sonis and Geoffrey J.D. Hewings (April, 1996)

Abstract: Interest in structural change over time has created a demand for analytical tools that can assist in exploiting trends and uncover tendencies in individual sectors or parts of sectors within the context of an economy-wide system of accounts. The present paper offers an alternative approach and is designed to be used with annual input-output or social accounting systems. To date, analysts were faced with the prospect of conducting simple comparative static approaches or the enormity of the task involved in constructing dynamic models with complex lead and lag structures. The temporal Leontief inverse, introduced in this paper, offers a less complex, more tractable method for examining structural change when a time series of input-output tables are available. The method draws upon some earlier work that proposed the notion of a field of influence of change and explored alternative methods of decomposition of change.
[Printed in Macroeconomic Dynamics, 1997/1998]

REAL 96-T-5
STRUCTURAL PATH ANALYSIS FOR THE MULTIREGIONAL INPUT-OUTPUT SYSTEM
Michael Sonis and Geoffrey J.D. Hewings (August, 1996)

Abstract: This paper provides the methodology that affords a bridge between Miyazawa's distinction between internal and external multiplier effects in a multi-economy system and the detailed, graph theoretic decompositions of influence associated with structural path analysis. The resulting system provides a useful analytical framework whereby the impacts of change in one region can be traced through the system of economies and back to the region of origin. The structural path approach facilitates a telescoping of the pathways of influence and thus provides the potential for identification of the most important sources of internal and external influence in a regional system of economies.
[Printed in Economic Systems Research, 1997]

REAL 96-T-6
A MIYAZAWA ANALYSIS OF INDUSTRIAL EMISSION INTERDEPENDENCIES BETWEEN POLLUTING AND NON-POLLUTING SECTORS
Oliver Fritz, Michael Sonis and Geoffrey J.D. Hewings (August, 1996)

Abstract: The industrial emission interdependencies between a set of polluting and non-polluting sectors are analyzed using a form of decomposition first proposed by Miyazawa and subsequently modified by Sonis and Hewings. The analysis is applied to a time series set of input-output tables for the Chicago region for the period 1975-2010 in an attempt to generate assessments of the internal and external multipliers and their changes over time. The results revealed the important role that structural change will play in determining pollution levels in the region in the future. In addition, significant variations were noted across sectors in terms of the direct and indirect contributions to pollution; these variations were interpreted using the notions of internal and external multipliers.

REAL 96-T-7
THEORETICAL AND APPLIED INPUT-OUTPUT ANALYSIS: A NEW SYNTHESIS. PART 1: STRUCTURE AND STRUCTURAL CHANGES IN INPUT-OUTPUT SYSTEMS
Michael Sonis and Geoffrey J.D. Hewings, (August, 1996)

Abstract: This synopsis represents a overview of some recent developments, explorations and extensions of input-output analysis undertaken during last decade in the Regional Economics Application Laboratory, University of Illinois at Urbana-Champaign, USA and the Bar-Ilan Laboratory of Environmental Information and Dynamics, Bar-Ilan University, Israel. This paper is the first of three review papers; in Part I, the focus will be on structure and structural changes in input-output systems and the following issues will be considered:
I. Temporal multipliers, temporal increment and temporal Leontief inverse: fields of influence of changes.
II. Economic Hierarchical Landscapes of backward and forward linkages: Key Sector Analysis, fields of influence and Multiplier Product Matrix.
III. Economic structural changes in the input-output systems: Barycentric Calculus of triple decompositions of gross output changes.
IV. Structural Q-analysis of the Leontief inverse.
In Parts II and III, attention will be directed to multiregional input-output analysis and the transition from comparative statics to dynamics.

 

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REAL 95-T-1
THE STRUCTURE OF THE INDONESIAN ECONOMY: A GENERALIZED STRUCTURAL PATH ANALYSIS
Michael Sonis, Geoffrey J.D. Hewings and Sri Sulistyowati (February, 1995)

Abstract: The compilation of several social accounting matrices for Indonesia has enabled the analysis of some important aspects of the economic structure of the economy. In the present paper, the analysis that has been conducted with structural path methods will be enhanced through the identification of a block structure for the technique. This generalized structural path analysis is offered as a complement, not a replacement, to the traditional applications of this method. A new form of triple decomposition of the social accounting matrix inverse is offered to assist in identifying important changes in the structure of the Indonesian economy for 1975, 1980 and 1985.

REAL 95-T-2
FORECASTING INDUSTRIAL RESIDUAL POLLUTION GENERATION IN THE CHICAGO REGION, 1992-2006
Oliver Fritz, Geoffrey J.D. Hewings, Michael Sonis(May, 1995: Revised December, 1996)

Abstract: Environmental regulation is but one way to ensure acceptable levels of pollution; in considering the existing and potential impact in the future of regulating emissions, policy-makers need to consider the impacts of structural change on the economy and to assess the way in which changes in the essential interdependence between sectors that characterizes regional economies might generate impacts on future emissions levels that could prove to be significant. In the present analysis, use is made of a quantity-adjusted dynamic general equilibrium model for the Chicago region to assess changes in the direct and indirect impact of pollution on an economy over the period 1992-2006.

REAL 95-T-3
DIRECT AND INDIRECT INDUSTRIAL POLLUTION GENERATION: A FIELD OF INFLUENCE APPROACH
Oliver Fritz, Michael Sonis, Geoffrey J.D. Hewings (June, 1995: Revised December, 1996)

Abstract: Using the methodology of the field of influence to uncover changes in the structure of an economy that may be said to be analytically important, attention is focused on the way a small number of interactions in an economy may generate significant impacts in terms of pollution. The analysis is directed towards and examination of the Chicago region's economy and focuses on the role of direct and indirect pollution generation. The sectors of the economy are divided into clean and polluting sectors; the analysis reveals that indirect pollution generation plays a very important role in the region. Furthermore, over time, the decrease in the level of intermediate exchange in the region's economy will have a significant influence on the level of pollution generation - with some modest increases and some important decreases - without any consideration of the impacts of environmental regulations.

REAL 95-T-4
OPTIMAL MANAGEMENT OF A REGIONAL INCOME AND POLLUTION PORTFOLIO
Oliver Fritz (August, 1995: Revised, December, 1996)

Abstract: Regional policy makers can react to structural changes and their economic consequences, but may also have the option to actively promote such changes in order to accomplish their policy goals. In the present analysis, use is made of the regional portfolio framework, first proposed by Conroy, in order to find the optimal regional industrial structure given the conflicting goals of industrial growth, risk minimization, and emissions prevention. Interindustry linkages are incorporated by adding an income multiplier table derived from a quantity-adjusted dynamic general equilibrium model for the Chicago region to the portfolio maximization problem. The results reveal that the inclusion of both interindustry linkages and emissions constraints in the modeling framework notably reduces the potential for efficiency gains through industrial diversification. Furthermore, risk reduction through a more equal sectoral distribution is in conflict with pollution prevention efforts that aim at minimizing the shares of polluting sectors.

REAL 95-T-6
A TYPOLOGY OF PROPAGATION OF CHANGES ON THE STRUCTURE OF MULTIREGIONAL ECONOMIC SYSTEMS: THE EUROPEAN UNION, 1975-1985
Michael Sonis, Geoffrey J.D. Hewings and Eduardo Haddad (September, 1995: Revised, November, 1996)

Abstract: The effects of structural change in all sectors of some regions in multiregional input-output systems are explored in this paper. For each region, the changes in direct inputs are decomposed into a matrix of intraregional changes and a matrix of interregional backward linkage changes. This distinction provides for a decomposition of changes in the Leontief inverse into a sum of matrices representing the matrices of intraregional and interregional fields of influence of changes. In turn, this process facilitates the identification of changes in gross outputs that may be traced to changes in intra- and inter-regional structural changes. The analysis is applied to the European input-output tables for 1975 and 1985.
[Printed in: Annals of Regional Science, 1996, vol. 30: 391-408]

REAL 95-T-7
LINKAGES AND MULTIPLIERS IN A MULTIREGIONAL FRAMEWORK: INTEGRATION OF ALTERNATIVE APPROACHES
Joaquim J.M. Guilhoto, Michael Sonis and Geoffrey J.D. Hewings (November, 1995)

Abstract: In this paper, two literatures that have explored the structure of economies are brought together. In the first case, the approaches to key sector identification (initially associated with Hirschman and Rasmussen) that were modified by Cella, Clements and Rossi and Guilhoto et al. to reveal what may be referred to a pure linkage approach are related to the concerns of Miyazawa and his identification of internal and external multiplier effects. While Miyazawa was interested mainly in identifying the sources of change in an economy, his approach shares considerable commonality with the new ideas in key sector identification in which a sector or set of sectors are separated from the rest of the economy. Hence, in both cases, a decomposition of the economy needs to be considered; the present paper reveals the similarity of perspective and provides the formal link between the two methodologies.

REAL 95-T-8
PAPA: AN ECONOMY-WIDE GENERAL PURPOSE GENERAL EQUILIBRIUM MODEL FOR THE BRAZILIAN ECONOMY
Joaquim J.M. Guilhoto (November, 1995)

Abstract: In this work, a description of the PAPA model, constructed for the Brazilian economy, is described as well as some simulations of policies made with this model. The PAPA model is a Computable General Equilibrium (CGE) model of the Johansen type and the solutions of the model are given in growth rates. This model is based on the ORANI model system constructed for the Australian economy and in that sense it is a general purpose model that can be used to study the impact of different economic policies on the Brazilian economy.
The model is defined for: a) 33 types of industries/commodities; b) 3 types of primary factors; c) 3 categories of labor; d) 2 sources of products (domestic, and imported); e) 5 types of product use; and, f) 3 income groups.

 

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REAL 94-T-1
FORECASTING STRUCTURAL CHANGE WITH A REGIONAL ECONOMETRIC INPUT-OUTPUT MODEL
Philip R. Israilevich, Geoffrey J.D. Hewings, Michael Sonis, Graham Schindler (June, 1994: Revised, January, 1996)

Abstract: The sophistication of regional economic models has been demonstrated in several ways, most recently in the form of linking several modeling systems or in the expansion in the number of equations that can be manipulated successfully to produce impact analyses or forecasts. In this paper, an alternative perspective is employed. What do regional macro-level forecasts indicate about the process of structural change? A new methodology is illustrated that enables analysts to make forecasts of detailed structural change in the interindustry relations in an economy. Using a regional econometric-input-output model developed for the Chicago Metropolitan region, derived input-output tables are extracted for the period 1975-2016. These tables are then analyzed to determine the forecasted direction of structural changes for the region. The innovation illustrated here is based on a model that exploits the general equilibrium spirit of computable general equilibrium models through the adjustment of input coefficients to clear markets.
[Printed in: Journal of Regional Science, 1997, vol. 37: 565-90]

REAL 94-T-2
MATRIX SENSITIVITY, ERROR ANALYSIS AND INTERNAL/EXTERNAL MULTIREGIONAL MULTIPLIERS
Michael Sonis, Geoffrey J.D. Hewings (August, 1994)

Abstract: Sherman and Morrison (1949, 1950) provided essential insights into the properties of sensitivity and error analysis in input-output systems through procedures for specifying the effects of changes in one coefficient or changes in one row or column on the rest of the system. Sonis and Hewings (1989, 1992) extended this work and generalized it to include a whole range of changes in direct inputs using the concept of a field of influence. The present paper considers the matricial changes in which sub-matrices of the matrix of direct coefficients change simultaneously; these sub-matrices may be considered to reflect different economic sub-structures. In this way, the block-generalization of the Sherman-Morrison and Sonis-Hewings formulae are possible through the development and extension of Miyazawa's (1976) notion of internal and external multi-region multipliers. In this way, the matricial decompositions of the matrix of fields of influence can be established.
[Printed in: Hitotsubashi Journal of Economics, 1995, vol. 36:61-70]

REAL 94-T-3
THE INPUT-OUTPUT MULTIPLIER PRODUCT MATRIX: AN APPLICATION TO CHINESE INPUT-OUTPUT TABLES
Michael Sonis, Geoffrey J.D. Hewings, Jie Min Guo (August, 1994)

Abstract: This paper provides a complementary perspective to the evaluation of economic structure represented in either input-output or social accounting matrix terms that has been adopted by Pyatt and Round (multiplicative decomposition) and Defourny and Thorbecke (structural path analysis). The proposed new approach analyzes the matrix derived from the product of row and column multipliers extracted from the Leontief inverse matrix. Within this framework, attention is focused on the following issues: (1) the hierarchy of backward and forward linkages and their associated economic landscapes reflecting the cross-structure of the multiplier product matrix; (2) the maximum entropy properties of the multiplier product matrix; (3) the consideration of the multiplier product matrix as the matrix of first order intensities of the fields of influence of change and the hierarchy of inverse important inputs; and (4) second order intensities of the field of influence. The meaning and importance of the multiplier product matrix is demonstrated through applications to the Chinese input-output tables for 1987 and 1990.

REAL 94-T-5
THE REGION VERSUS THE REST OF THE ECONOMY: THE EXTRACTION METHOD.
Michael Sonis, Geoffrey J.D. Hewings (October, 1994)

Abstract: Interest in the role of key sectors, components or transactions within an economy has been revisited in recent years through the use of partitioned input-output analysis. In this paper, these perspectives are complemented by consideration of the hierarchy of sectors (or regions in the case of a multiregional economic system) in which an individual sector (or region) is evaluated through its synergetic interaction with the rest of the economy (or other regions).

REAL 94-T-6
COMPARATIVE ANALYSIS OF REGIONAL ECONOMIC STRUCTURE: EXPLORATIONS IN THE BRAZILIAN ECONOMY
Joaquim Guilhoto, Eduardo Martins, Geoffrey J.D. Hewings (November, 1994)

Abstract: While comparative analysis of economic structure has been a prominent feature at the national level, there have been very few studies that have focused at the regional level. Using two similarly constructed regional tables for the states of Minas Gerais and Ceará and a national table for Brasil, several traditional and new methods are used in an attempt to uncover similarities and differences in the structure of regional economies and the national economy of which they are a part. The analysis focuses on the variations in self-sufficiency that exists among the two states and the nation since the input-output tables record domestic purchases and hence, the input coefficients are not technical coefficients in the true sense of the word. The analysis reveals not only some important insights into the structure of these economies but also some important attributes of methods that have been used to examine economic structure.

REAL 94-T-7
ECONOMIC STRUCTURAL CHANGE THROUGH TIME: BRAZIL AND THE UNITED STATE COMPARED
Joaquim J.M. Guilhoto, Geoffrey J.D. Hewings, Michael Sonis, Jie Min Guo (November, 1994)

Abstract: Using the input-output tables for the economies of Brazil and the United States, a comparative study focuses on how the economic structure of two large countries, with different levels of development, changed through time (1958-77 for the United Stated and 1959-80 for Brazil). The change in the economic structure is decomposed into three initial components (final demand, technology, and their synergetic interaction) and thereafter these components are further divided into change initiated within the sector and outside the sector. From this analysis it is possible to identify the patterns of structural change in the two economies. The results indicate a rather remarkable degree of communality in the patterns of growth processes in both countries, with more significant differences between sectors than between countries. The analysis confirmed earlier findings about the role of demand changes but was able to capture important differences in internal-to-the sector versus external-to-sector sources of demand change.
[Printed in: Revista de Economia Aplicada, 1997, vol. 1:135-57 ]

REAL 94-T-8
IMPACT ANALYSIS OF NETWORK CHANGES ON URBAN FORM AND STRUCTURE: A CASE STUDY OF CHICAGO
T.J. Kim, J-H. Rho, Geoffrey J.D. Hewings (November, 1994)

Abstract: The purpose of this paper is to illustrate a procedure whereby the impacts of global climatic change can be related to potential disruptions in a transportation network and to the spatial organization of production and land use. Using a combined transportation-land use-commodity flow model for Chicago, the effects of climatic change are revealed in increases in the levels of Lake Michigan. The resulting flooding of a major north-south parkway is modeled in terms of disruption to journey-to-work flows and movements of commodities within the city. The impacts are assessed on land uses, transportation demand, land rents and the intensity of land uses in the vicinity of the closed parkway.
The modeling procedure suggests that while this type of analysis can be conducted, a smooth, integrated model linking climatic change and economic interactions within a metropolitan system will require a great deal of additional work. The non-transitivity of responses and the different time scales involved present unique, challenging problems.

REAL 94-T-9
USING INPUT-IUTPUT TO MEASURE INTERINDUSTRY LINKAGES: A NEW PERSPECTIVE
Joaquim J.M. Guilhoto, Michael Sonis, Geoffrey J.D. Hewings (November, 1994)

Abstract: In this paper, two literatures that have explored the structure of economies are brought together. In the first case, the approaches to key sector identification (initially associated with Hirschman and Rasmussen) that were modified by Cella, Clements and Rossi and Guilhoto et al. to reveal what may be referred to a pure linkage approach are related to the concerns of Miyazawa and his identification of internal and external multiplier effects. While Miyazawa was interested mainly in identifying the sources of change in an economy, his approach shares considerable commonality with the new ideas in key sector identification in which a sector or set of sectors are separated from the rest of the economy. Hence, in both cases, a decomposition of the economy needs to be considered; the present paper reveals the similarity of perspective and provides the formal link between the two methodologies.

REAL 94-T-10
STRUCTURE OF FIELDS OF INFLUENCE OF ECONOMIC CHANGES: A CASE STUDY OF CHANGES IN THE ISRAELI ECONOMY
Michael Sonis, Geoffrey J.D. Hewings and Anatoly Bronstein (November, 1994)

Abstract. This paper deals with the problem of analysis of the synergetic effects of multiple economic and functional changes within the regional Input-Output or Social Accounting systems. The analysis is based on the Fields of Influence methodological approach, introduced by Sonis and Hewings in the series of publications started from 1988. In this paper this methodology is elaborated further with the help of the new notions of the Intensities of Fields of Influence of multiple changes in the direct input coefficients. The construction of the matrices of intensities allows the utilization of ideas of combinatorial topology in the form of Atkin's structural Q-analysis, i.e., the construction of matrices of incidence and the chains of synergetic interactions between different industries. The proposed methodology is used for the analysis of changes in Israeli Economy, 1977-1982. As a result, new characteristics of the synergetic inter- and intra-sectoral interactions are presented in the forms of the chains of sectors, corresponding to the biggest direct and synergetic economic effects.

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