Chapter 7 Regional and multiregional economic models: A survey

This chapter reviews a concise survey and a set of reflections concerning current regional and multiregional economic models. The notation current refers to the situation around the mid-1980s. A number of reviews of multiregional economic models undertaken in the first half of the 1980s forms the primary input for this survey. The chapter provides the use of such models. Three kinds of uses are envisaged: forecasting and scenario generation, policy impact analysis, and policy generation or design. Thus, the type of regional and multiregional economic models that are given attention in the chapter are used for decision-making support. Regional economic modelsto be usefulneed to pass both relevance and validity tests. The relevance test addresses the issue of modeling for specific situations or adhering to theoretical stringency. Policy-makers are often keen on detailed, but partial and simple models. Adaption mechanisms in a model are often not appreciated. The validity issue is related to the role of regional data for economic model building. Data problems make estimation and validation, especially of dynamic models, a problem in a regional context. This is a serious threat to the success of regional economic models for policy purposes, particularly in the current , generally less stable, economic environments.