Regional Input-Output models aim to quantify the impacts on industry’s outputs,
and other economic indicators, of different final demand vectors for goods and
services produced in the same or in different regions. These models are well
suited for regional economic analysis as they combine inter-industrial and interregional
economic interdependencies. MULTI2C is a general flexible procedure,
developed by a group of researchers from the University of Coimbra, Portugal,
that allows for the construction of that kind of models for different geographic
configurations.
This work explores the construction of a bi-regional input-output model for
Portugal, based on the MULTI2C approach, considering two regions: the NUT II
Centro of Portugal and the Rest of the Country. This model considers rectangular
matrices with 431 products and 134 industries. Further, it considers different types
of households according to their main source of income, i.e., labour earnings,
capital income, real estate income, retirement benefits and other social transfers.
This modelling framework may be closed with respect to the consumption of
different household’s types, but this paper considers as endogenous the labour
earnings type. Besides the model structure and the methodological choices for
its construction, this work focuses on estimating interregional trade.Finally, the model is used to assess the impacts in the Centro region of Portugal,
and in the Rest of the Country, derived from a shift in income’s distribution in
the Centro region, consisting in a reduction of the labour share, compensated by
an increase in business investment, which however do not confine to the NUT
II Centro of Portugal but, into some extent, spillover to the Rest of the Country.