A Flexible Modeling Framework to Estimate Interregional Trade Patterns and Input-Output Accounts

This study implements and tests a mathematical programming model to estimate interregional, interindustry transaction flows in a national system of economic regions based on an interregional accounting framework and initial information of interregional shipments. A national input-output (IO) table, regional data on gross output, value-added, exports, imports and final demand at sector level are used as inputs to generate an interregional IO account that reconciles regional economic statistics and interregional transaction data. The model is tested using data from a multi-regional global input-output database and shows remarkable capacity to discover true interregional trade patterns from highly distorted initial estimates. JEL Classification Numbers: R1, C67, C81 World Bank Policy Research Working Paper 3359, July 2004 The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org. * Patrick Canning is a senior economist at the Economic Research Services, United State Department of Agriculture, 1800 M street, NW, Washington, D.C. 20036; email: [email protected]. Zhi Wang is a consultant at the World Bank and adjunct Professor at City University of Hong Kong. Corresponding address: 838 Summer Walk Drive, Gaithersburg, Maryland 20878. E-mail: [email protected]. The authors thank the editor of this Journal and three anonymous referees for their valuable comments. P ub lic D is cl os ur e A ut ho riz ed P ub lic D is cl os ur e A ut ho riz ed P ub lic D is cl os ur e A ut ho riz ed P ub lic D is cl os ur e A ut ho riz ed