The TFS regional modelling methodology

Abstract

Treyz G. I. and Stevens B. H. (1985) The TFS regional modelling methodology, Reg. Studies 19, 547–562. The Treyz, Friedlaender, Stevens (TFS) regional (i.e., sub-national) modelling approach represents an alternative to constructing regional models using traditional econometric procedures (TEP). In the TFS approach, a model structure based on economic theory is successively calibrated by using information from many sources and parameter estimates at each step from studies that encompass all regions. The use of a maintained structure and of large data sets yields econometric response parameters that are valid for all regions. However, the specific calibration coefficients and the time series for the model of any particular region are based on data for that region only. This makes the behavioural characteristics of the model of one region differ substantially from those of another region but it does not change the basic theoretical structure of the model from region to region. In this article the structural equations used in TFS models are presented. Key structural parameters are identified and their estimates are found in studies across all industries and occupations in time series for forty-eight states.