The Extended Econometric Input–output Model With Heterogeneous Household Demand System

Abstract

This paper proposes an extension to the regional econometric input-output model (REIM) [Conway, R.S. (1990) The Washington Projection and Simulation Model: A Regional Interindustry Econometric Model. International We integrate a demand system with age and income parameters into the REIM. The extended model thus addresses concerns about the effects of household heterogeneity. The initial testing is conducted with a model for the Chicago metropolitan area. First, using aggregate expenditure data by income and age groups, the almost ideal demand system with group fixed effects is constructed. Next, the estimated demand system is linked to the REIM to reflect long-term changes in the age and income distribution of households. The longrange simulation from the extended model takes into account structural changes in expenditure type stemming from changing demographic composition. The extended model further broadens the scope of impact analysis under various scenarios associated with age and income changes.

Fully Dynamic Input-Output/System Dynamics Modeling for Ecological-Economic System Analysis

“…More specifically, technical coefficients within the IO model will become dynamic along with the relationships between the ecological and economic systems and within the ecological system. Constant technical coefficients have been subject to important criticisms against the use of IO modeling [13]. A fully dynamic ecological-economic model better capturing important nonlinear dynamic behaviors and feedback is in line with a suggestion by [12].…”

“…If constant technical coefficients could be a reasonable assumption for a short-term period (~5-10 years), it is much less so in the longer term. To overcome this issue, several approaches have been proposed [35]) and we use a classical method adopted in various IO-EC models [13,[35][36][37].…”

“…Unless otherwise mentioned, all prices in this paper are expressed in 2012 Euros. Following Kim et al [13] and Israilevich et al [37,38], z and x are expressed as follows:…”

“…Recently, integration of such nonlinear dynamic modeling (e.g., SD) with an IO analysis [10][11][12] has been suggested. While dynamic modeling captures the nonlinear dynamics 2 of 22 of ecological-economic systems, IO enables the study of sectoral impacts [13,14]. However, there have been few attempts to integrate these two modeling approaches [15][16][17].…”

The opportunity costs of commuting: the value of a commuting satellite account framework with an example from Lisbon Metropolitan Area

“…These distinct consumption patterns have implications for the location where the consumption actually takes place and have an effect on each region's households demand structure. Thus, a change in this structure also has an important impact on the economy (Kim et al, 2015).…”