Regional Multiplier Analysis: A Demometric Approach

This paper reports on the design and testing of an adequate framework for conducting regional multiplier studies in areas experiencing rapid population growth. It puts forward the demometric approach, one that applies econometric methods to the analysis of demoeconomic growth. Two alternative models are proposed here. The first is an aggregate model presenting a demometric revision of the traditional economic-base model. The second model, an enlarged version of the first, is characterized by a breakdown of economic activities into nine major sectors. Both models are fitted to data for the rapidly growing metropolitan area of Tucson, Arizona, USA. They are then used to derive tentative impact and dynamic multipliers which substantiate the role of households as consumers and suppliers of labor in the development of the Tucson Standard Metropolitan Statistical Area (SMSA). The major finding is that, for the same level of resources, the second model yields better policy implications than the modified (and therefore also than the traditional) economic-base model.