| This study examines the macro-economy of a metropolitan or small regional economy from both a theoretical and an empirical perspective. A general equilibrium model of a small region is developed which separates total regional production between two types of industries. One industry is perfectly integrated with the larger national market, and as a consequence production and employment in this industry is determined by relative cost conditions and relative capital stocks. By contrast, the remaining industry, termed the non-tradeable goods sector, is affected by local demand conditions. Demographic changes are shown to have significant implications for regional macro-economic performance through their direct impact on the non-tradeable goods sector. The study also illustrates the need to explicitly recognize within the model that a large fraction of local non-wage income is determined independently of local economic conditions but is sensitive to local demographic changes. The comparative statics results of changes in national economic conditions, comparative costs, local government fiscal policies and demographic changes are presented.;The theoretical framework that is developed is used to formulate the empirical specification of a macro-econometric model of the Miami-Ft. Lauderdale standard consolidated statistical area. The model's within sample accuracy is evaluated and multiplier impacts are estimated for changes in population, age distribution, national manufacturing activity, local government spending and taxation, and U.S. exports to Latin America. The importance of demographic changes, including foreign immigration, and the emergence of the area as a trade entrepot are examined using counter-factual historical analysis. A longterm forecast for the region's economy under alternative assumptions is also presented. |
