In a usual simulation analysis of a regional economy, only region-wise interaction mechanism built in a model is that of between a regional and national economy.
On the contrary, our econometric model tries to clarify the multiple region-wise interaction mechanism between
(1) the regional and the national economy,
(2) the regional and other influential regional economy,
(3) sub-regional economies included in the whole region.
As a numerical example, the econometric model of ‘Chuyo Region’ - the region surrounding the City of Nagoya - is shown. The whole equation system consists of four sub-sets of simultaneous equations.
The analysis is performed by comparing the following various elasticities calculated from coefficients obtained by equations in reduced form,
∂
Oi/∂
Oj•
Oj/
Oi, ∂
Yi/∂
Oj•
Oj/
Yi, ∂
Oi/∂
Gj Gj/
Oi,
where O means the output of the manufacturing industry in the region or sub-region, Y the income of the regional or sub-regional economy, G the national or regional or sub-regional government's expenditure, and the suffix i or j means ith or jth region or sub-region or the nation.
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