| The purpose of this research has been to develop a multiregional structural model which can be used by policymakers to identify and assess the relationships that link public policy decisions and regional economic development. In order to account for the complexity of this relationship, the model system has been developed to satisfy a number of requirements. First, it explains interindustry trade linkages and interregional economic flows. The impact public policy decisions have on regional economic development depends on the degree to which regional economies are interrelated. Second, the operation of regional factor markets, particularly for capital and labor, are considered. The effect policy decisions have on factor supplies is an important determinant of regional economic performance. Finally, business activity is measured at a detailed level of industrial disaggregation. Even policies designed to influence aggregate economic activity affect businesses differentially, which results in various regional economic impacts due to regional business mix differentials.; In the chapters of this thesis the multiregional model system is specified, estimated, tested, and applied under a number of different policy scenarios. In one case, the regional economic implications of various state and local government tax and expenditure decisions are assessed. The simulation results indicate that state and local tax policy does influence business investment decisions. Under most conditions, however, the use of tax incentives to attract businesses by state and local governments does not appear to be particularly effective. In a second case, the efficacy of using federal tax policy to affect regional economic development is assessed in the case of the East North Central region. This region has undergone a long period of slow economic growth due to the rationalization of its very large industrial base. In order to stimulate investment in the region, federal depreciation laws are altered to allow manufacturers in the region to depreciate their stock of capital more quickly. By favoring investors in the region, it is shown that the region can overcome its economic difficulties more quickly. |
