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Contents Introduction

This study develops a policy model in the context of the hierarchical administration system of the regional economy in Japan. In the case of Japan, a hierarchy of national, prefectural, and municipal (city) administration exists, and a different regional policy may be established for each level of the hierarchy. Generally, the policy and its evaluation might differ according to whether priority is given to national interests or to each region’s interests. To examine such a situation, quantitative analysis is conducted using the computable general equilibrium model (CGE model).

Concretely, Kitakyushu City and Fukuoka City constitute an administrative region at the city level. These two cities and the rest of Fukuoka Prefecture together make up Fukuoka Prefecture.

On the other hand, there is a case for including Yamaguchi Prefecture, the adjacent prefecture, in these regions. In that case, it can be called Northern Kyushu Area by combining Fukuoka Prefecture and Yamaguchi Prefecture. Such a large area then becomes important in the regional policy because of being placed higher in the hierarchy. Five regions including the rest of Japan are focused on in this study.

Moreover, due to the availability of the input-output tables of these regions, the database to develop the CGE model can be estimated after tabulating the interregional input-output table.