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DYNAMIC MODELING AND BORDER EFFECTS
Regional Economic Models, Inc.
what does REMI say? sm
REMI Presenters
• Senior Economic Associate
• (202) 713-1397
Scott Nystrom, M.A.
• Managing Economic Associate
• (413) 559-1907
Chris Brown
what does REMI say? sm
Session Agenda
REMI Backdrop
REMI Methodology
Residence Adjustment
Model Software
Pollution Taxes
what does REMI say? sm
About Us
Research and Data
• Services related to regional modeling, forecasting, and economic impacts
• Began as an offshoot of the University of Massachusetts-Amherst in the 1970s and 1980s and still is an ongoing research project
Customized Software
• Full service, “off-the-shelf,” Windows-based software and websites for economic and demographic research at the regional-level
• Model regions and capabilities customized to the users’ specific requirements
Services and Support
• Unlimited training and technical support for all software and website users from a dedicated team of economists and software technicians
• Issue-oriented policy research, consulting reports, and expert testimony
what does REMI say? sm
Client Base
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Analytical Framework
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750 2
01
2
20
15
20
18
20
21
20
24
20
27
20
30
20
33
20
36
20
39
20
42
20
45
20
48
20
51
20
54
20
57
20
60
Eco
no
mic
/De
mo
grap
hic
Ind
icat
or
Control Forecast Policy A Policy B
what does REMI say? sm
Regional Customizations
How REMI defines model regions:
A county (or equivalent statistical unit) or…
A collection of counties
e.g. an MSA or a state
Can cross state borders
Multiple regions
No requirement for contiguousness
Customized by needs
what does REMI say? sm
Four Methodologies
Input-Output (IO) Tabulation
• Industry-to-industry transactions and social accounting matrices (SAM)
• Supply-chains, regional purchase concepts (RPCs), and multipliers
Computable General Equilibrium (CGE)
• Long-term effects after markets “clear” back to a new equilibrium
• Dynamic adjustments to population, market shares, fuel mixtures, etc.
New Economic Geography
• Endogenous productivity adjustments from industry/labor clustering
• Full trade-flows by industry and interregional competitiveness
Econometrics
• Estimation of statistical parameters from observable data
• Strength of responses, elasticities, preferences, and “time-lags”
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Model Structure
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Dynamic Scoring
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Washington, DC
$2.48
$2.30
$1.26 $1.45
$0.41
$12.30
$9.03 $14.15 $4.85
$2.08
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Motivating Factors
Previous methodology uses the Journey-to-Work (JTW) data on commuting from the U.S. Census Historical with periodic updates
Relied on “fixed-shares”—no internal adjustments to changing consumer prices or transportation costs
Tended to overestimate “downtown” growth and underestimate aggregate housing supply
New methodology makes commuting shares adjust endogenously to economic conditions More accurate reflection of location decisions
Allows for novel simulations on transportation and taxes
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Commuting Equation
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Commuter Volumes
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MA Carbon Tax
Linking two models
Three scenarios $5/ton initial rate
Increased $10/year
Peaks at either: $15/ton, $30/ton, or
$45/ton
How does this impact the economy and emissions?
REMI PI+ Model
• Regional economic impacts
• Jobs, GDP, cost of living
• Broad applications
CTAM Model
• Projected tax revenues
• Changes in energy prices
• Specific application
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Employment by Industry (average year under $30/ton carbon tax)
-200 0 200 400 600 800 1,000 1,200 1,400 1,600
Utilities
Mining
Forestry, Fishing, and Related Activities
Management of Companies and Enterprises
Transportation and Warehousing
Information
Wholesale Trade
Retail Trade
Real Estate and Rental and Leasing
Arts, Entertainment, and Recreation
Manufacturing
Finance and Insurance
Educational Services
Administrative and Waste Management Services
Other Services, except Public Administration
Professional, Scientific, and Technical Services
Accommodation and Food Services
Construction
Health Care and Social Assistance
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Carbon Emissions
66
67
68
69
70
71
72
73
74
75
76 2
01
2
20
13
2
01
4
20
15
2
01
6
20
17
2
01
8
20
19
2
02
0
20
21
2
02
2
20
23
2
02
4
20
25
2
02
6
20
27
2
02
8
20
29
2
03
0
20
31
2
03
2
20
33
2
03
4
20
35
Mill
ion
s o
f m
etr
ic t
on
s o
f C
O2
$15 tax
$30 tax
$45 tax
Baseline
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1776 I St. NW Suite 750
Washington, DC 20006
(202) 716-1397
Regional Economic Models, Inc.
