Input-output restrictions, regional structural models and econometric forecasts

The development of regional economic forecasting models and regional input-output models has to a large extent been a separate one. Recently, however, there have been a large number of studies dealing with the integration of the two methods for forecasting and impact analysis. In this chapter we propose a two-step process for integrating the I-O structure into an econometric forecasting model. In the subsequent section we summarise the fundamental relationship among industries outlined in a standard regional I-O model, develop a relatively standard econometric model, and demonstrate the potential linkage between the two. The data base used is then described and empirical results presented. The final section summarises the contribution of the analysis, and indicates areas for further research. -from Editors