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The phantom of the matrix: Inverting the case on closure in Cole's model
Author(s) -
Cole Sam
Publication year - 1999
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5597.1999.tb00755.x
Subject(s) - closure (psychology) , rebuttal , closing (real estate) , mathematical economics , mathematics , earnings , economics , econometrics , calculus (dental) , law , political science , accounting , medicine , dentistry , finance , market economy
Abstract. In Closing the Case on Closure in Cole's Model Randall Jackson and Moss Madden critique my solution to the time‐lagged regional input‐output model. My rebuttal demonstrates that they: i) interpret my model incorrectly, ii) are inconsistent in their own specification, and iii) make inapplicable numerical comparisons between short‐ and long‐term solutions. I show also iv) the correct solution to the totally closed model is neither trivial, nor singular, and v) this resolves the apparent paradox of infinite multipliers in a finite world. Moreover, vi) in my model, injecting exogenous demands equal to export earnings correctly reproduces the base output levels. The standard model does not meet this test.