An Interregional Input-Output Model for Estimating the Effects of Regional Revitalization Policy

The economic effects of policies for regional revival are generally estimated using an intra-regional input-output model. However, when analyzing economic effects on a small region such as a municipality, input-output tables for the region need to be constructed. It is generally recognized that there are three approaches to constructing regional input-output tables: survey, non-survey, and hybrid. Survey-based tables are considered to be more accurate. But effectively they are limited by cost and time factors. And, the traditional regional input-output model creates some problems when actually estimating economic effects. One major issue is how to endogenize private household consumption that can be linked to labor income. That is, the gross regional income is distributed to other regions due to interregional commuting, and some part of the consumption demand of households living in the region is allocated to other regions.

Therefore, we propose a versatile interregional input-output model that considers interregional trade and income distribution. For the purpose of this study, we developed models for estimating self-sufficiency rates for intermediate goods. As an example, we analyzed the effects of some regional revitalization policies for some cities such as Minamisoma city and Seto city. By using this model, it is possible to accurately estimate the economic effects of regional revitalization policy without regional input-output tables.