Modeling Unexpected Events in Temporally Disaggregated Econometric Input-Output Models of Regional Economies

Discrete-time econometric input-output models of regional economies, such as Regional Econometric Input-Output Models (REIMs), have been used to examine the impacts over time of unexpected (and usually extreme) events. Analyses carried out with such models have been limited, in part, because of their temporal orientation and their somewhat a-theoretical specification. In this paper we review how REIMs can accommodate disequilibrium adjustments in economies to unexpected events and then discuss analytical contributions made by sequential interindustry models (SIMs) before presenting the case for using continuous-time formulations of REIMs to capture both events with impacts over periods that are shorter than the observation/solution interval of the model and nonlinear continuous event recovery processes.