Regional economic modelling: a comparison of econometric, input-output and integrated modelling of the Illawarra economy
The adoption of an integrated input-output and econometric (IO-EC) framework has gained increased attention in the regional science literature. Such an integrated framework attempts to combine the dynamic characteristic of time-series with the detailed intersectoral disaggregation of input-output (IO) analysis, to model the time path of the economy at the regional level and to provide more accuracy in representing the economic structure and analysing structural shifts within a regional economy. This paper applies econometric modelling, an IO analysis, and integrated IO-EC modelling to analyse the Illawarra region of NSW; the results from each of these models are then compared. The integrated framework is found to be superior based on its comparative forecasting capabilities and impact analysis accuracy. The integrated model is applied to an ex-post forecasting experiment to investigate the effects of BlueScope Steel shutdown in the Illawarra region, providing a comprehensive and dynamic impact analysis of this scenario.