1 Department of Economics, Alzahra University, Tehran, Iran

2 Department of Economics, Allame Tabatabaei University, Tehran, Iran

3 Department of Economic Research, Ministry of Economics and Finance, Tehran, Iran


The importance of spatial economy has been considered recently in Iran and has been investigated in the form of single regional input-output model in a series of articles which  is a mutation in the regional studies in Iran. In these studies regional coefficients were calculated and tested statistically. As applications of single regional coefficients have some limitations, overcoming to limitations, inter-regional input-output model has been developed. The main aim of this paper is to introduce a non-survey technique to estimate interregional input-output coefficients for two regions: Tehran and the Rest of Iran which  is the first experience in Iran. These coefficients will enable policy makers to capture feedback and spillover effects that are primarily attribute to inter-regional trading model. In this study, regional coefficients are estimated for 10 sectors in 2001. Results show 58% of Tehran import is from the rest of Economy whereas 41%  of the Rest of Economy is from Tehran. Other results also show spillover effects in Tehran province are greater than the Rest of Economy. While, small feedback effects are observed in both regions. Moreover, we found the errors of using single input-output coefficients and neglecting the spillover and feedback effects are 20% and 12% for the Rest of Economy and Tehran province respectively, both are considerable and reveals the importance of using two-region input-output model.