The stability of input structures in a supply-driven input-output model: A regional analysis
Disruptions in the supply of strategic resources or other crucial factor inputs often present significant problems for planners and policymakers. The problem may be particularly significant at the regional level where higher levels of product specialization mean supply restrictions are more likely to affect leading regional industries. To maintain economic stability in the event of a supply restriction, regional planners may therefore need to evaluate the importance of market versus non-market systems for allocating the remaining supply of the disrupted resource to the region`s leading consuming industries. This paper reports on research that has attempted to show that large short term changes on the supply side do not lead to substantial changes in input coefficients and do not therefore mean the abandonment of the concept of the production function as has been suggested (Oosterhaven, 1988). The supply-driven model was tested for six sectors of the economy of Washington State and found to yield new input coefficients whose values were in most cases close approximations of their original values, even with substantial changes in supply. Average coefficient changes from a 50% output reduction in these six sectors were in the vast majority of cases (297 from a total of 315) less than +2.0% of their original values, excluding coefficient changes for the restricted input. Given these small changes, the most important issue for the validity of the supply-driven input-output model may therefore be the empirical question of the extent to which these coefficient changes are acceptable as being within the limits of approximation.
- Research Organization:
- Argonne National Lab., IL (United States). Environmental Assessment and Information Sciences Div.
- Sponsoring Organization:
- Environmental Protection Agency, Washington, DC (United States)
- DOE Contract Number:
- W-31109-ENG-38
- OSTI ID:
- 10158759
- Report Number(s):
- ANL/EAIS/PP-76274; ON: DE94013427; TRN: AHC29413%%45
- Resource Relation:
- Other Information: PBD: [1994]
- Country of Publication:
- United States
- Language:
- English
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