IMPACT ANALYSIS OF THE SOUTH CAROLINA ECONOMY

A large-scale econometric model of the South Carolina economy is constructed and estimates of structural parameters obtained. The purpose of the model is to forecast economic activity and to assess the impact of a variety of exogenous shocks to the economy. The structure of the model owes much to the contributions of Lawrence Klein and Norman J. Glickman to regional econometric model building. The model consists of sixty-four behavioral equations and fourteen identities segmented into five blocks: Output, Employment, Wages and Income, Demographic, and Tax. Equations are included for a number of two-digit SIC code manufacturing industries that have been identified by previous study as important. Gross state product accounts are not available in the state and thus estimates using a modified Kendrick-Jaycox approach are made.;Some evidence of structural change in the South Carolina economy, as the dominant position of the textile industry weakened in the 1970's, appeared in the 1977 and 1978 forecasts. The structural model is then re-fitted with 1977 and 1978 data included. A long-term forecast to 1990 was generated. The model is then used to assess the economic impacts of Public Service Employment, an increase in military payrolls, and shocks to the Electrical Equipment and Machinery, Except Electrical industries.;The structural model was fitted to time-series data for the years 1958-1976. Parameters were estimated using a variety of techniques with Ordinary Least Squares estimates proving best. The structural equations are specified in logarithmic form necessitating solution of the reduced form of the model by the Gauss-Seidel iterative technique. The model's forecasting ability was tested by making both a backcast over the sample period and forecasts for 1977 and 1978. MAPE statistics indicated that the model's forecasting ability compares favorably with other regional econometric models.