Measuring Economic Change in the Illawarra, New South Wales: An Integrated Framework

Abstract

Merging input-output (IO) and econometric (EC) models has gained increased attention in regional science literature because it combines the dynamic characteristics of time series with the detailed intersectoral disaggregation of IO to model the time path of the economy. It provides more accuracy in representing economic structure and structural shifts within an economy. This article applies IO analysis and integrated IO-EC modelling to analyse the Illawarra economy. The integrated framework is found to be superior based on its forecasting abilities and impact analysis accuracy. It is applied to forecast the effects of BlueScope Steel shutdown in the Illawarra.

Forecasting, impact analysis and uncertainty propagation in regional integrated models: A case study of Australia

“…Although such a comparison helps assess the difference in the extent of further improvement in prediction accuracy generated by the two integrated models, it is beyond the scope of this paper. However, a baseline comparison of a coupled model and a standalone IO is conducted by Masouman and Harvie (2018) and in a different study several versions of an embedded model are compared with a standalone IO analysis (Masouman and Harvie, 2017). With regard to the econometric estimates, if the sample size is relatively small, as is the current case, it is recommended to use a two-step method to estimate generalised least squares (Gujarati and Porter, 2009).…”

“…It is presumed readers of this journal are familiar with standalone IO models; hence the modelling process is not presented in this paper. Please refer to Masouman and Harvie (2017) to learn more about this. 10.…”