Source: New Zealand Institute of Economic Research – NZIER’s new tool for evaluating regional economic impacts released
Dr Erwin Corong and John Ballingall presented to the Ministry of Business, Innovation and Employment (MBIE) staff on 18 March 2015 to demonstrate NZIER’s new tool for regional economic impact analysis.
This tool is a bottom-up Computable General Equilibrium (CGE) model of the New Zealand economy, with 15 regions and 106 industries. Regional economies are linked through inter-regional trade in goods and services, and also flows of labour and capital. The model is based on the TERM model developed by the Centre of Policy Studies in Melbourne.
As the Canterbury rebuild illustrative example in the presentation shows, growth in one industry in a regional economy draws resources from other industries and regions. This means that while the Canterbury economy grows strongly as a result of the impetus from the rebuild, and this growth spills over into other regions too, some other regions and industries contract. This clearly makes sense in a world where resources are largely fixed, at least in the short term, but previously these trade-offs have not been easy to quantify.
The key feature of our new model is that it explicitly captures positive and negative regional spillovers and resource movements associated with regional initiatives. This allows policy-makers and businesses to identify the important trade-offs and winners and losers from regional growth investments.
You can view the presentation here (pdf).