Abstract

In an attempt to study regional economic behavior, this article presents a forecast of economic activity in Southern California for 1967. It makes the forecast with the help of an economic model, designed to analyses the past behavior of Southern California from 1953, to 1961. On the schematic diagram of the econometric model for southern California, each circle represents a variable in the model, which in turn reflects a sector of activity in the economy. Some of the basic assumptions made are that the business climate existing in 1966 will continue in 1967 with further escalation of the war in Vietnam and with strong inflationary pressure. It also assumes that military personnel and civilian defense employment in Southern California will decline by 20000 and 3000 respectively and that defense expenditure and defense department payrolls in the area will remain unchanged. It forecasts that Gross Revenue is expected to increase $4160 million. The Southern California economy, therefore is expected to grow faster than the nation in 1967, whether or not the war in Vietnam continues to escalate.