More on Multipliers

Recently, Oosterhaven and Stelder (2002, Journal of Regional Science, 42, 533-543) (OS) addressed the issue of measuring the economic importance of an industry. In practice, the traditional multipliers are commonly multiplied by, for example, the outputs. According to OS, this is a misuse that leads to double counting, a correction for which results in their net multipliers. In this note, I will provide an economic interpretation, which suggests that net multipliers may be a good choice for descriptive purposes. The comment by de Mesnard (2002, Journal of Regional Science, 42, 545-548) adopts a different viewpoint. Following his approach, I will show that also the common procedure - which was the central point of rejection in OS - has a sound economic interpretation. In its turn, this yields an alternative interpretation for the matrices used in supply-driven input-output models