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Input-Output Analysis, Linear Programming and Modified Multipliers

Erqian Julia Zhu, Man-Keun Kim and Thomas Harris
Authors registered in the RePEc Author Service: Tom Harris

No 46716, 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia from Southern Agricultural Economics Association

Abstract: The input-output (IO) analysis explores changes in final demand through the regional economy using multipliers. However, it isn’t flexible to investigate the regional impact from the capacity limitations which are directly imposed on production, not final demand. This is because the multipliers are changing with exogenous restrictions on production. Conventionally, the IO analysis is performed assuming exogenous production restrictions being the changes in final demands or assuming the sector being exogenous sector like the final demand. If researchers or policy makers are interested in only economic impacts from production restrictions, there is no need to look into the modified multipliers. The modified multipliers should be considered when researchers and policy makers attempt to analyze the compensation of impact, especially recovery of loss using government expenditure. We suggest that the linear programming is a useful and efficient tool to derive modified multipliers and estimate correct regional impact from the policy changes.

Keywords: Community/Rural/Urban; Development (search for similar items in EconPapers)
Pages: 17
Date: 2009
New Economics Papers: this item is included in nep-geo
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saeana:46716

DOI: 10.22004/ag.econ.46716

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