A note on distortions from estimating the regional impacts of exogenous changes in output |
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Authors: | Cheol-Joo Cho |
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Institution: | Department of Urban Planning and Real Estate, Cheongju University, Cheongju, Korea |
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Abstract: | This paper demonstrates both theoretically and empirically that when outputs instead of final demands are exogenously predetermined, the traditional Leontief final demand model overestimates economic impact, and even more so in a multiregional context. We assess this premise vis-à-vis the Leontief output model using the 2013 interregional input–output table of the Republic of Korea. We find that from a multiregional perspective the standard Leontief final demand model yields substantially biased output multipliers for Chungbuk Province. |
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Keywords: | Leontief final demand model Leontief output-based model exogenous output shocks estimation biases interregional feedback |
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