The neoclassical economic base multiplier

P.G. McGregor, E.P. McVittie, J.K. Swales, Y.P. Yin

Research output: Contribution to journalArticle

12 Citations (Scopus)

Abstract

In this paper we derive an analytical expression for the regional neoclassical economic base marginal employment multiplier. The model that we adopt is a variant of the 1-2-3 general equilibrium model used in trade analysis. Its specific neoclassical characteristics are that laborsupply is a positive function of the real consumption wage and that factor and product demands are price sensitive. We calculate the employment multipliers associated with both a demand and supply stimulus to the basic sector. We demonstrate that it is possible for the marginal economic base multiplier to take any positive or negative value. However, the value of the marginalmultiplier is likely to approximate the value of the conventional average multiplier the closer production and utility functions are to Cobb-Douglas specifications and the more elastic is the labor supply function.
LanguageEnglish
Pages1-31
Number of pages30
JournalJournal of Regional Science
Volume40
Issue number1
DOIs
Publication statusPublished - Feb 2000

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multiplier
labor supply
economics
wage
equilibrium model
Values
stimulus
supply
demand
price
supply and demand
product
consumption
analysis

Keywords

  • economic base multiplier
  • neoclassical
  • 1-2-3 general equilibrium model

Cite this

McGregor, P.G. ; McVittie, E.P. ; Swales, J.K. ; Yin, Y.P. / The neoclassical economic base multiplier. In: Journal of Regional Science. 2000 ; Vol. 40, No. 1. pp. 1-31.
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The neoclassical economic base multiplier. / McGregor, P.G.; McVittie, E.P.; Swales, J.K.; Yin, Y.P.

In: Journal of Regional Science, Vol. 40, No. 1, 02.2000, p. 1-31.

Research output: Contribution to journalArticle

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