The Northeast and the Rest of Brazil Economies in a Mercosur Context, 1992-2014: An Econometric Interregional Input-Output Approach

Abstract

In order to study and to forecast how the Northeast and the Rest of Brazil economies would behave in a Mercosur context, from 1992 to 2014, a combination of two models was used: a) a macroeconometric model of the Brazilian economy that gives forecasts for the macro variables; and b) a two regions interregional input-output model that provides results at the level of sectors in each region, as well as transactions among the regions and the external markets (divided into Mercosur and Rest of the World). The initial set of input-output data for the interregional model is for the year of 1992. The results from the macroeconometric model are used as a guideline in the interregional model such that the results obtained in this model must be consistent with the ones obtained in the first model. In general the results show that in the Mercosur context the impact on the Rest of Brazil region will be greater than the one on the Northeast region, and at the same time this impact will be concentrated in a small set of sectors. © 1998, JAPAN SECTION OF THE REGIONAL SCIENCE ASSOCIATION INTERNATIONAL. All rights reserved.