THE REGIONAL INCOME MULTIPLIER:A COMMENT*
| Author | PHILIP A. BLACK |
| Published date | 01 June 1984 |
| DOI | http://doi.org/10.1111/j.1467-9485.1984.tb00473.x |
| Date | 01 June 1984 |
Scotfish
JournaloJPoliricalEconomy,Vol.
31,
No.
2,
June
1984
0
1984
Scottish
Economic
Society
THE REGIONAL INCOME MULTIPLIER
:
A COMMENT*
PHILIP
A.
BLACK
Rhodes University
In their paper on the regional income multiplier, Sinclair and Sutcliffe
(1983)
have made several criticisms
of
my own attempt to extend the multiplier model
(Black,
1981).
While their estimates of the various repercussionary effects seem
very useful indeed, some of the theoretical comments appear to be somewhat
incomplete and/or misplaced.
I
Sinclair and Sutcliffe maintain that
I
have failed to distinguish between “one
shot” and “continuing” income injections, which should be analysed sep-
arately
“.
. .
so
that the application of the multiplier to them can provide
separate estimates
of
the temporary and permanent rises in income which they
generate” (p.
277).
According to equation
2
of my paper, however, it would
appear that my multiplicand
is
similar to that
of
Brownrigg
(1971)
in that it
does indeed differentiate between a one shot injection in the form
of
“investment (e.g. construction) expenditure” (i.e.
lipi
(Black, p.
228),
or
Brownrigg’s
Ji),
and a continuing injection defined as “. .
.
the continuing
flow
of
income arising from the employment given by the project” (i.e.
Ii(l
--pi),
or
Brownrigg’s
J2).
Such a formulation of the model seems sufficiently flexible to
enable one
either
to consider one shot injections explicitly (e.g. Brownrigg,
1973),
or
to ignore them completely (e.g. Greig,
19711,
depending on the
purpose and time perspective of the study in question.
Sinclair and Sutcliffe’s distinction between a one shot and continuing
injection suggests yet a further modification to the regional multiplier model.
We refer to the need to apply an injection leakage only to that part of “induced
investment” comprising a one shot injection.
If
we also assume that induced
investment is only partly related to the change in regional income (Sinclair and
Sutcliffe, p.
277
and Richardson,
1973,
ch.
6),
then the latter modification
implies that my induced investment function (p.
228)
should be replaced by the
following relationship
:
NiCpi(l-m:)+(l
-pi)]
=
a+niyj:
*
I
would like
to
thank my colleagues, Drs
M.
M.
Courtney and
B.
E.
Dollery,
for
helpful
comments made
on
an earlier draft
of
the paper.
Date of receipt of final manuscript
:
19
May
1983.
199
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