NET ECONOMIC BASE MULTIPLIERS AND PUBLIC POLICY

The regional multiplier ordinarily applied to regional impact simulations is the Keynesian foreign-trade multiplier. This assumes that all of the increase in the aggregate demand is from the region’s “export” sector. In many applications there can be off-setting changes in domestic demand with multipliers of their own. For any region, the value of a multiplier for a new development within it is not some fixed number depending on the economic characteristics of the region, but it would also vary depending on characteristics of the development. Policy analysts should be on warning that they must carefully determine the exact assumptions and calculations underlying the “multiplier” implications of proposals by varying parties to policy debate concerning development proposals.