A New Technique for the Construction of Non-Survey Regional Input-Output Models

Abstract

A technique for creating regional input-output models based on national input-output technological coefficients is developed and tested. The Regional Purchase Coefficient (RPC), i.e., the proportion of regional demand fulfilled from regional production, is based on substitution between extra-and intra-regional sources in response to relative delivered costs. An RPC estimating equation is fitted using state economic and interstate transportation data. RPCs for all sectors are estimated for use in constructing 500-sector non-survey models for Washington and West Virginia. The A matrices, inverse matrices, and multipliers for suitable aggregations of these models are compared with the corresponding components of recent survey-based models for the same two states. The comparisons indicate that the RPC technique can provide at low cost models that are acceptably accurate for use in regional impact analysis.