Forecasting, impact analysis and uncertainty propagation in regional integrated models: A case study of Australia

Abstract

The integration of input–output and econometric models at regional level has gained popularity for its superior performance in forecasting employment and examining the impacts of policies. There are a number of approaches to integrate the two models. This paper examines the integration of input–output with econometric modelling using two merging methodologies, namely coupling and holistic embedding. Each methodology is analysed with respect to the accuracy of its results of total and sectoral employment forecasting. Both methodologies are applied to a regional economy in Australia. The methodology which shows superior forecasting accuracy is applied to examine the significance of sectors that generate the highest number of employments relative to other sectors.

Merging macroeconomic and territorial determinants of regional growth: the MASST4 model

“…Most such tools (Brandsma et al 2015; 1 3 2020), in fact, are based on long-run theoretical equilibrium conditions, translated into vector autoregression (VAR) relations, which, while based on solid theoretical grounding, fall short of a sound toolbox to assess off-equilibrium variations. 1 Others, merging input-output (IO) tables with econometric tools, gain more insight into short-run employment fluctuations, at the cost of less interpretative power in longrun permanent changes (Masouman and Harvie 2018).…”