R EGIONAL input-output tables have long been acclaimed as useful tools in regional forecasting, especially long-run forecasts, yet surprisingly few regional projections have made a serious attempt to use them. This paper reports on one effort in this direction an inputoutput based projection for the State of Washington for the year 1980. Because of the time constraints no effort will be made to describe how the 1963 State of Washington table was developed. Rather, it is given as datum [3]. In addition, again because of time, not all of the details in the projection process are included. Finally, because few are interested in the results, no bulky tables have been included.

not to work in a stabilizing fashion over short cycles. Still another example is given in a recent article 6 which suggests that the orthodox notion of municipal finance being fiscally perverse, while correct for major swings in economic activity, is just the reverse for minor ups and downs. Our lists need reexamination in light of the postwar experience. This does not imply that major swings are no longer a problem; rather that lesser swings are different in character and also worthy of the attention of fiscal policy makers.

CONSIDERATIONS of the impact of changes in the volume and composition of expenditures by the defense and space agencies will be misleading if they ignore the regional component. In considering disarmament, traditional monetary and fiscal policy responses produce an effect which is nationwide in scope. Such policies may not be of much help to states and communities, such as California or Wichita, whose economies are heavily dependent upon defense expenditures. In addition, shifts in the regional pattern of these expenditures can produce similar stresses in local economies. A major problem in this connection has been the measurement of the defense-space expenditure impact in a region. Aside from an induced impact operating through regional consumption and business investment functions, the impact on income and employment can be divided into two components: (1) the direct impact through prime contract awards to firms, and (2) the indirect or inter-industry impact through subcontracts and purchases of supplies by prime contractors. While there have been some attempts to measure the direct impact, little work has been done which also accounts for the indirect impact. This paper reports on an effort to measure both the direct and indirect impact of defense-space expenditures on the manufacturing sector of the Los Angeles-Long Beach Standard Metropolitan Statistical Area (SMSA). The task is an empirical one. Hence, we shall briefly review some of the various techniques of measurement and present the results of a short-cut method to measure the impact on Los Angeles manufacturers. Empirical Difficulties Almost all approaches to the measurement of the regional impact of defense-space expenditure involve variations of an input-output framework.1 Unfortunately, given the present state of data availability, they are not operational, at least without extended research effort. National data from the 1947 table, while useful, are somewhat out of date.2 Regional data are all but nonexistent. Pending the development of more adequate data, some short cuts need to be examined. In the search for short cuts, it is useful to keep in mind what the gross flows data of an interregional input-output table reveal. Row information reflects where sales are made in terms of industries, final demand sectors, and regions. Column information indicates the source of inputs from other industries both inside and outside of the region. Short cuts, essentially, involve something less than the complete cross-check of independent estimates of the row and column entries. Most regional input-output studies, in fact, get these estimates sometimes from row information and sometimes from column information, but rarely from independent estimates of both. A column-oriented approach, which has a good deal of appeal, simply traces down the subcontractors. There is some evidence to suggest, as an order of magnitude, that half of a specific defense or space program prime contract is subcontracted.3 It would seem that tracing down a few layers of subcontractors would account for most of the impact. Unfortunately, this is not the case. When a prime

OUR empirical knowledge of the demand and structural interrelationships of the economy at the regional level is indeed limited. Some understanding of these interrelationships can be gained through (1) the economic baseforeign trade multiplier approach, (2) the regional interindustry (input-output) approach, and (3) various other approaches, involving linear programming and the like, which are not of concern here.' Although the interindustry approach seems superior to the base-multiplier approach for most, though not all, purposes, the real difficulty lies in translating either approach into an operational one so that meaningful estimates of these interrelationships can be generated at a reasonable cost. This is a rather unfortunate state of affairs because it means that decision makers have no firm guidelines to use in attempting to assess the impact of autonomous demand forces upon regional economies or specific sectors within them. In an attempt to at least partially remedy this situation, we have developed an alternative type of framework which, for the lack of a better name, can be called an intersectoral flows model. This model incorporates certain features of the base-multiplier approach in addition to certain features of a regional interindustry approach hopefully some of the best features of each in terms of our objectives. In designing the model, one of the main concerns was that it be operational, in the sense that the necessary data could be obtained at a reasonable cost. Thus, to the extent that this objective is achieved, the restrictions on making such studies and repeating them may no longer be so formidable. The particular region chosen for study is California and the three major subregions within the State. Since the interest here is in the model and its implementation, as contrasted with the implications for the California economy, major attention will be focused on these topics.

HE current chaos in metropolitan fiT nance stems from two different sets of problems. The first, which we label traditional, are exemplified by such expressions as: ever-increasing demands for service, inadequate tax base, archaic tax structure, lack of planning, and other familiar expressions. Without doubting that these problems are acute and in need of attention, we wish to consider an overlooked second set of problems. The second set of problems arises when the budget functions of governments are placed within the context of the newly developed theory of public finance.' Here, governments are seen as performing certain overall budget functions provision of goods and services, income redistribution, and economic stabilization. However, except for the provision of one class of goods and services, namely, social goods, little attention has been focused on the budget problems involved in applying the newer theory to lower levels of government and the attendant problems of fiscal federalism which arise. We will argue that much of the chaos in metropolitan finance arises from a misunderstanding of the budget functions to be performed. The heart of the problem, it will be shown, lies in the vertical relations between governmental units. Under fiscal federalism the failure to solve problems of vertical relations, in turn, gives rise to certain horizontal conflicts between governmental units. While our discussion applies to lower-level governments in general, we focus attention on metropolitan areas where the problems are more vividly illustrated. The analysis will be structured in terms of the various budget functions which governments perform. The provision of social goods will be considered briefly. Next, we look into certain interferences with consumer sovereignty (merit goods) which governments undertake. Finally, issues involved when governments redistribute income will be considered.2 For each function we postulate a set of vertical rules ordering the relations between governments. This ordering will enable us to highlight the issues involved.