ABSTRACT.The dynamic relationship between sectoral value added and regional economic growth is analyzed using a stochastic intersectoral model estimated by ordinary least squares and linear systems techniques. A state‐space portion of the model identifies the time element of sedoral value added. Dynamic multipliers, tracing the temporal path of regional growth, are calculated for the state of Georgia over the period 1963–1986. This application shows that the impacts of sectoral shocks can follow cyclical as well as monotonic patterns and that the direction and magnitude of the impact may change over t