Journal of Economics Business Industry
Vol. 2 No. 2 (2024): November

A Dynamic Bayesian Regional Input–Output Model for Forecasting Provincial Economic Transformation, Resource Constraints, and Poverty Reduction

Yi-Ming Mei (Tsinghua University)
Zhu Tian (Tsinghua University)
Jianwu Li (Tsinghua University)
Xiaobo He (Renmin University of China)



Article Info

Publish Date
30 Nov 2024

Abstract

China's structural economic transformation presents a critical analytical challenge: how to forecast macroeconomic phenomena at the provincial level while simultaneously incorporating resource constraints and poverty reduction objectives within a single modelling framework. This study constructs a dynamic, stochastic, Bayesian provincial input–output model for the Chinese economy denoted hereafter the SD R-IO China model capable of producing regional gross value added (GVA) forecasts and provincial multiplier estimates. The model couples system dynamics modelling with regional input–output analysis. Sector growth follows the limits-to-growth hypothesis. Application is made to China's resource sectors (agriculture, coal, oil and gas, electricity and water) and to provincial poverty indices. The model is constructed in Vensim®. Bayesian inference calibrates Type I and Type II multipliers (output, income, employment, GVA) within empirically defensible ranges. Model accuracy is assessed using the mean absolute percentage error (MAPE) statistic. The model replicates national GVA with a MAPE of 4.1% over the test period 2018–2022. Provincial forecasts achieve "highly accurate" classification for 11 of 31 provincial units and at least "reasonable" for all others. Sector multipliers conform to a priori expectations. A negative correlation between resource sector multipliers and provincial poverty headcount is observed, most prominently in the agriculture and electricity subsectors. The SD R-IO China model offers a scientifically rigorous, freely accessible tool for provincial macroeconomic analysis, with direct implications for green economy policy and poverty alleviation programming.

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Journal Info

Abbrev

Jebin

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

Description

Journal of Economics Business Industry is a journal through a peer-review process.  Journal of Economics Business Industry for academics and researchers to publish their articles which is an original text that has not been published in another journal. The focus and scope are in the fields of ...