Dynamic Systems Modelling of the North-West Region: 2. Estimation of the Spatio-Temporal Policy Model

Abstract

This is the second of four papers which will be published in close sequence in this journal. It examines, first, a general economic-policy model, and second, existing data sources for the North-west region. The restrictions on the availability of data necessitate the specification of a more limited model of spatio–temporal economic structure. Five equations can be specified: for unemployment, employment, population, migration, and industrial movement, although policy variables are also included. Using the identification criteria and diagnostics discussed in the first part of this series, the lag structure of the model is then specified, and the parameters estimated by a two-stage least-squares procedure. The estimates from this model are then used to comment on patterns of regional dynamics and spatial policy.