Regional input-output (I-O) analysis is traditionally motivated by a s
hort-run, extreme Keynesian vision of markets. In this paper we argue
that an appropriately formulated, investment-endogenous, I-O system re
plicates the long-run equilibria of a wide range of regional models, m
any of which do not operate as I-O systems in the short run. In partic
ular, we use a computable general equilibrium (CGE) framework to illus
trate the impact of an aggregate demand disturbance on an I-O and stan
dard neoclassical model. When run forward over a number of periods, th
e results from the capacity-constrained neoclassical model asymptotica
lly approach the I-O outcome. We use sensitivity analysis to examine t
he speed of adjustment of the neo-classical system and investigate bar
riers to the attainment of the I-O result.