ABSTRACT
Working directly from the factor demand equations implied by a specific production function R. T. Crow develops a system that avoids the inconsistencies implicit in Engle's model. Thus, embracing the principle that the simplest design that works is the best design, it is assumed that gross investment is a simple weighted average of past desired to actual capital stock discrepancies. Assuming that there are some costs and frictions involved in adapting to desired levels of inputs, the level of actual labor inputs may be determined by a partial adjustment model. The investment equation is difficult to estimate in any model and this is especially so in regional models. In the simple disaggregation scheme of the Ecesis model, the manufacturing sector is regarded as the basic sector with the nonmanufacturing sector treated as nonbasic. The economic-base theory is implemented by making nonmanufacturing employment a function of manufacturing employment.
