1.123 |
0.015 |
0 |
0.003 |
0.009 |
0.048 | |
0.012 |
1.004 |
0 |
0.007 |
0.032 |
0.006 | |
B-1 = |
0 |
0 |
0 |
0 |
0 |
1 |
0.039 |
0.094 |
0 |
1.019 |
0.031 |
0.041 | |
0.090 |
0.121 |
0 |
0.144 |
1.221 |
0.084 | |
0.101 |
0.172 |
1 |
0.029 |
0.045 |
- 0.893 |
In turn, the (output) multipliers for restricted model are calculated as follows
"1.123 |
0.015 |
0 |
0.003 |
0.009 |
0.048 | ||
0.012 |
1.004 |
0 |
0.007 |
0.032 |
0.006 | ||
α = [i',0]B-1 = [11111 |
0] |
0 |
0 |
0 |
0 |
0 |
1 |
0.039 |
0.094 |
0 |
1.019 |
0.031 |
0.041 | ||
0.090 |
0.121 |
0 |
0.144 |
1.221 |
0.084 | ||
-0.101 |
0.172 |
1 |
0.029 |
0.045 |
- 0.893 | ||
= [1.264 1.234 |
0 |
1.172 |
1.293 |
1.179] |
Note that the original multipliers are α = [1.397
1.461 1.320 1.211 1.353].
There are two things should be addressed here. First, the modified multiplier for
the restricted sector is zero (in the short-run). This is because the final demand should
decrease proportionally to reductions in production. Until then increases in final demand
doesn’t have any effect. Second, the last element in α vector, α6 = 1.179, is the marginal
value of restriction. If the exogenous restriction on the production decreases by $1,
which means production increases by $1, overall economic impact would be $1.179. In
other words, if manufacturing sector has $1 more restriction, overall economy will lose
$1.179.
If there are 10% reduction in production from manufacturing sector, the whole
economy will lose $1,869 (= $1,416x1.32). Suppose that the central government try to
recover this loss by increasing government expenditure or investing service sector. The
11
More intriguing information
1. The name is absent2. Ultrametric Distance in Syntax
3. THE RISE OF RURAL-TO-RURAL LABOR MARKETS IN CHINA
4. Government spending composition, technical change and wage inequality
5. The name is absent
6. Olive Tree Farming in Jaen: Situation With the New Cap and Comparison With the Province Income Per Capita.
7. The Impact of Financial Openness on Economic Integration: Evidence from the Europe and the Cis
8. The name is absent
9. INTERPERSONAL RELATIONS AND GROUP PROCESSES
10. Applications of Evolutionary Economic Geography