The Introduction of Dynamic Features in a Random-Utility-Based Multiregional Input-Output Model of Trade, Production, and Location Choice

This study introduces dynamic features into the random-utility-based multiregional input-output (RUBMRIO) model. The RUBMRIO model predicts interzonal trade and travel patterns, as well as business and household location choices, using consumption and production process data. It equilibrates production and trade, labor markets and transportation networks simultaneously. Multinomial logit models predict the origins of productive inputs, including commute behaviors (for the input of labor). With household locations and expenditures/incomes relatively well known for the very near future, one can predict current trade patterns by making household consumption, as well as (foreign and domestic) export demands, exogenous to the model, resulting in short-term predictions. The long-run equilibrium, wherein household locations and consumption patterns are endogenous, will differ from this short-term image. This study specifies the transition mechanism from the short term to the long term, via dynamic adjustments in household consumption across zones, providing a prediction of the greater region’s evolutionary path. Results are examined for an evolution of Texas trade, jobs and population across 17 industry sectors and 254 counties, as ultimately driven by exports to foreign and domestic purchasers.