A NETWORK-BASED ALGORITHM FOR COMPUTING KEYNESIAN INCOME MULTIPLIERS IN MULTIREGIONAL SYSTEMS

Dimitrios Tsiotas

Regional Science Inquiry, 2022, vol. XIV, issue 2, 25-46

Abstract: In the context of the Keynesian “multiplier effect” approach, regional economic growth and development are conceived as the result of changes in demand stimulating an iterative process of returns of income. Aiming to revisit this established regional economic model, promote multidisciplinary thinking, enjoy better supervision of computations and intuitive interpretation of the results, broaden the applicability of the model, and serve educational purposes in regional economics and development, this paper proposes an algorithm for computing Keynesian income multipliers in multiregional systems. Building on network connectivity, estimations of the regional shares of imports, marginal propensity to consume, and changes in demand, the proposed algorithm provides a framework for standardizing computations of the multiplier effect in multiregional systems. The algorithm is implemented in two theoretical scenarios, contributing to a deeper conceptualization of the computation of the Keynesian income multipliers, and an empirical case of the land interregional commuting network in Greece, providing insights into the developmental dynamics of the labor market (demand for employment) in Greece. Overall, the analysis highlights the symbiotic relationship between the multiplier effect and network structure in regional markets, promotes multidisciplinary thinking in regional science and economics, and provides a code of this network-based algorithm to motivate further research.

Keywords: regional markets, multiplier effect; export-base model; demand for employment; interregional commuting (search for similar items in EconPapers)
JEL-codes: R11 R15 R23 R41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:hrs:journl:v:xiv:y:2022:i:2:p:25-46

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