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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
. 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.