Last updated on: 4/18/2005

Name (Last, First): Grimes, Donald
Title: Mr.
Co-authors: Penny Prime
Department: Institute for Labor and Industrial Relations
Organization: University of Michigan
Mailing Address: 7211 Spikerush Ct Brandenton, FL 34202
Work Phone: 941-907-2228
FAX:
E-mail: dgrimes@umich.edu
Web Site:

Paper Title: Economic Modeling for West China Provinces: A Policy Perspective

Abstract:
As the Chinese economy modernizes and becomes market-oriented, it is becoming imperative for its policy planners to have tools that can guide their decision-making. Particularly critical is to have some quantitative sense of the impacts on the economy of evolving trends and of the repercussions of policies that intervene in the workings of the economy. It is also important to recognize that China is a collection of regional economies that in turn influence the national economy and are affected differently by national decisions and activities. In this paper we propose to develop an operational regional model for Sichuan province. The plan for model construction is to combine input-output techniques with econometric equation estimation, so that the model captures the structural interactions of the economy while allowing for dynamic responses over time. The model would incorporate a demographic component that interacts with the economic variables. Particularly important in modeling the Chinese regional economy successfully is the recognition of the large agricultural base of its workforce as the economy strives to industrialize. Although some of our techniques are standard to policy models of this type, the design of the model needs to be creative to capture some of the unprecedented dynamics underlying the Chinese economy. To accommodate these issues, our model will use a modified general equilibrium framework for Sichuan Province, incorporating permanent disequilibrium generated by the continuous flow of labor from the rural to urban areas.