CLOSURE IN COLES REFORMULATED LEONTIEF-MODEL - A RESPONSE

My paper The delayed? impacts of plant closures in a reformulated Leon tief model showed that the time-varying impacts of changes to a region al economy could be approximated usefully by a simple elaboration of t he Leontief inverse (Cole, 1988). I have applied the method in a varie ty of situations, typically to calculate the shifts in community incom e and its distribution following a major catastrophe. In all cases I u se a single or multi-region social accounting matrix. Since Jackson et al (1997) have been unable to reproduce my results I shall begin with a step-by-step demonstration. Then I shall show that their failure li es in their treatment of the external (rest-of-world) sector. This app ears to arise from their overly restrictive definition of input-output analysis in relation to other types of model, and their confusion as to the difference between simplification, approximation, and model val idation.