Abstract for: A System Dynamics Approach to the Regional Macro-economic Model

The advent of a depopulating society has become apparent in Japanese economy. There is a rising concern that a declining population diminishes Japanese economic growth. This concern is much more significant in regional economies, in which aging workers in the basic industry or an excessive population decline have been longstanding problems, than the national economy. I have developed a quantitative method for population and economic forecasting to examine the current status of a declining population. Linking the population estimates, which are consistent with the population census, to the macroeconomic model with gross domestic product by industry, we are able to examine the effect of a depopulating society on the regional economy. The simulation of this model reveals following future pictures: industries, which are dependent on domestic demand, will decline and per capita income will increase for the while. A declining population has an impact not only on macroeconomic outcomes but also on microeconomic aspects inside the region. Many core areas in the economic growth are losing their positions. I will also point out that the interdependency between core areas and peripheral areas has started changing.