Decomposing Multipliers for Economic Systems Involving Regional and World Trade

Abstract

This paper is concerned with the analysis of linkages between economic systems and the spillover and possible feedback effects one system may have on another. It is not a new topic, the initial stimulus in the literature coming from Machlup (I943) and the seminal papers by Metzler (I950) and Chipman (I950). Almost precisely the same questions raised by these authors have been readdressed subsequently by many writers and in a variety of contexts. Most recently, Goodwin (I983) has developed a world matrix multiplier with much the same overall objectives as Machlup and Metzler in mind. Metzler's proposition was to understand 'the mechanism by which an expansion or contraction of income in one region or country is transmitted to other regions or countries '.' In addition, he assumed that 'the conclusions apply without modification to the regions within a single country, or, indeed to any regional classification of the world economy, such as the economies comprising Eastern Europe, Western Europe, Latin America, and similar regions'.2 In fact the question has also long occupied the attention of many regional economists working in the context of sub-national regions. The question of interdependence between sub-national regional economies generally assumes a special importance simply because such regions are relatively open economies and are subject to fewer natural and artificial barriers to commodity trade and factor movements than may exist between countries.3 Even so, interest has focused almost exclusively on regional interdependence through commodity trade and within the framework of multiregional input-output systems.4 However, there are some exceptions; Klein and Glickman (I 9 77) have developed a multiregional model of a fairly aggregative nature which incorporates other regional interdependencies. A review of this and similar models has been carried out by Glickman (I97 7). Paralleling this interest in interregional interdependence at the sub-national level, there has been a revived interest in questions of linkage at the international level, with the advent of the project LINK model (pioneered by Klein and Hickman),5 the United Nations model of the world economy (Leontief et al. * This paper sets out my own interpretation of, and solution to, a problem which I have worked on jointly with Graham Pyatt. Sections I and II in particular are the result of our joint work. Sir Richard Stone also showed me an unpublished research note of his which greatly clarified the research issues involved. Therefore, I wish to record more than the usual debt of gratitude to them both, although of course I must accept responsibility for the outcome. 1 Metzler (I950, p. 329). 2 Metzler (1950, p. 330). s Ohlin (I933)-4 There is a vast number of examples in such studies. The field is summarised in Richardson (I972), and a most notable recent study is Polenske (I980), which is a regional model for the United States. 6 See Hickman (1974) and Waelbroek (I976). [ 383 I 13-2 1 Note that (I-B,,)-l and (I-B22)-l can each be decomposed furt...

Globalization, Economic Reform, and Structural Price Transmission: Sam Decomposition Techniques with an Empirical Application to Vietnam

“…respectively block (e.g. Pyatt and Round (1979), Round (1985), and Stone (1981)), and path decomposition (Defourny and Thorbecke, 1984). As in the previous section, the approach is straightforward, but using it in the present context makes it possible to elucidate price linkages in economies such as Vietnam with extensive structural and institutional rigidities in a transparent and analytically useful manner.…”

“…In a seminal series of contributions, Stone (1981), Pyatt and Round (1979), and Round (1985) showed how the multiplier matrix M can be decomposed into three economically meaningful additive (or multiplicative) components or sub-matrices. The first of these is a matrix that includes both the direct effects on the endogenous accounts of one- To decompose the price-transmission matrix M' let us take expression (4) and consider any matrix A*, which satisfy standard algebraic requirements.…”

“…In a series of seminal contributions, Pyatt and Round (1979), Defourny and Thorbecke (1984), and Round (1985) each elaborated methods of economy-wide empirical analysis based on the social accounting matrix (SAM). They have been intensively used to examine the income generating process in scores of countries, and justifiably so.…”

The measurement of the spatial effects of Chinese regional carbon emissions caused by exports

“…In the later studies, spillover effect was separated from feedback effect of inter-regional economic growth (Round, 1985;Sonis et al, 1993;Dietzenbacher, 2002;Pan and Li, 2007 , .…”

Japanese Regional Economic Structure Interpreted through the Multiplier Product Matrix.

“…Prominent among the techniques that have been proposed are the familiar multiplicative decompositions associated with the work of Pyatt (1979) and and Round (1988and Round ( , 1985 and interpretations using structural path analysis by Defourny and Thorbecke (1984). These approaches were directed towards the evaluation of economies based on the structure of social accounting matrices this paper provides for an alternative, yet complementary, perspective that focuses on the analysis of the multiplier product matrix that is derived from the products of the column and row multipliers of the Leontief inverse matrix.…”