Closing the case on closure in Cole's model

Jackson, Randall; Madden, Moss

doi:10.1111/j.1435-5597.1999.tb00754.x

Cited by 3 publications

(1 citation statement)

References 11 publications

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“…However, Cole advocates fully closing the single‐region model (i.e., endogenizing all components of final demand including trade), which led to criticisms by Jackson et al. (), Jackson and Madden (), and Oosterhaven () since it makes the model theoretically inconsistent and unsolvable.…”

Section: Methodsmentioning

confidence: 99%

Comparing the Economic Impact of Natural Disasters Generated by Different Input–Output Models: An Application to the 2007 Chehalis River Flood (WA)

Avelino

Dall’erba

2018

Risk Analysis

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Due to the concentration of assets in disaster-prone zones, changes in risk landscape and in the intensity of natural events, property losses have increased considerably in recent decades. While measuring these stock damages is common practice in the literature, the assessment of economic ripple effects due to business interruption is still limited and available estimates tend to vary significantly across models. This article focuses on the most popular single-region input-output models for disaster impact evaluation. It starts with the traditional Leontief model and then compares its assumptions and results with more complex methodologies (rebalancing algorithms, the sequential interindustry model, the dynamic inoperability input-output model, and its inventory counterpart). While the estimated losses vary across models, all the figures are based on the same event, the 2007 Chehalis River flood that impacted three rural counties in Washington State. Given that the large majority of floods take place in rural areas, this article gives the practitioner a thorough review of how future events can be assessed and guidance on model selection.

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Section: Methodsmentioning

confidence: 99%

Comparing the Economic Impact of Natural Disasters Generated by Different Input–Output Models: An Application to the 2007 Chehalis River Flood (WA)

Avelino

Dall’erba

2018

Risk Analysis

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The phantom of the matrix: Inverting the case on closure in Cole's model

Cole

1999

Papers in Regional Science

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In Closing the Case on Closure in Cole's Model Randall Jackson and Moss Madden critique my solution to the time-lagged regional input-output model. My rebuttal demonstrates that they: i) interpret my model incorrectly, ii) are inconsistent in their own specification, and iii) make inapplicable numerical comparisons between short-and long-term solutions. I show also iv) the correct solution to the totally closed model is neither trivial, nor singular, and v) this resolves the apparent paradox of infinite multipliers in a finite world. Moreover, vi) in my model, injecting exogenous demands equal to export earnings correctly reproduces the base output levels. The standard model does not meet this test.JEL classification: R0, R11, R12, R15, R34

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Lessons from the debate on Cole's model closure

Oosterhaven¹

2000

Papers in Regional Science

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Cole (1989Cole ( , 1997Cole ( , 1999 advocates the introduction of expenditure lags and the fullest possible closure of single-region input-output models. Jackson et al. (1997, 1999) claim that closing also with regard to the Rest-of-the-World leads to inconsistencies and zero exogenous demand, which makes impact studies impossible. Using somewhat different arguments I agree with them: endogenous interregional feedbacks are conceptually impossible outside a full interregional model. Two hardly discussed points, however, remain for further research. First, closing with regard to all other regional demand is precarious too, as it empirically and theoretically amplifies the one-sidedness of the demand-driven input-output model. Realistic impact studies ask for models including supply-side aspects. Second, adding expenditure lags is an improvement, but the way in which this can be done and should be done requires further theoretical development. JEL classification: C67, D57, E17, R15Note of the Editor-in-Chief: While the preparations for this issue were in progress, the regional science community was struck by the information that Moss Madden fell seriously ill shortly after his return from South Africa, where he participated in an RSAI symposium. Only a few days later, everybody was shocked by the announcement of his sudden untimely death at the age of 53. Professor Moss Madden was an internationally renowned scholar and highly appreciated colleague. His academic legacy comprises numerous seminal contributions to input-output analysis, simulation modeling, and forecasting in regional science. Moss was a good friend of many of us active in regional science, and will be missed. We offer our sincere condolences to his family, friends, and colleagues. As a tribute, commemorating his relentless efforts to advance our knowledge of regional input-output analysis, we dedicate this article to him. It reflects on the debate to which Moss contributed so much.

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Closing the case on closure in Cole's model

Cited by 3 publications

References 11 publications

Comparing the Economic Impact of Natural Disasters Generated by Different Input–Output Models: An Application to the 2007 Chehalis River Flood (WA)

Comparing the Economic Impact of Natural Disasters Generated by Different Input–Output Models: An Application to the 2007 Chehalis River Flood (WA)

The phantom of the matrix: Inverting the case on closure in Cole's model

Lessons from the debate on Cole's model closure

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