Small Area Modeling of the Industrial Sector (SAMIS): An Integrated Econometric—Interindustry Approach

Industry modeling and analysis are vital to regional policymaking. However, the most effective empirical techniques—econometric and input—output—often produce contrary results. This paper is a summary of a new modeling methodology that attempts a reconciliation. Called I-SAMIS, the new approach integrates the flexibility and macro-orientation features of the time-series econometric technique together with the interindustry sensitivity of input—output. Two sections of the paper discuss the new modeling approach and detail the linking mechanism. A model of this new type has been constructed for northern California. This application is discussed in the next two sections. Model equations for nineteen manufacturing sectors, performance and forecasting comparisons are presented.