2012 Volume 42 Issue 1 Pages 61-75
The paper provides selective comments on the usefulness of economic multipliers in assessing the impacts of regional policies with particular focus on transportation infrastructure investments. Regional multipliers are extremely simple and very convenient tools for estimating the overall impacts of a regional policy on such things as local income and employment. The issue is whether this simplicity and convenience is being bought at the expense of serious distortions in the accuracy of the calculations. The paper looks at the realism of the assumptions that underlie most multiplier based analysis and at the potential for institutional biases leading to distorted outcomes when deploying regional multipliers. There is a particular, but not exclusive focus on the United States.
JEL Classification: O18, R15
