Qualitative Input–Output Analysis of the Indian Economic Structure

Qualitative input–output (IO) analysis can be considered mostly in terms of a graph-theoretic formulation, which involves the construction and use of an adjacency matrix, derived from a binary transformation of the IO coefficient matrix. Classical attempts at qualitative IO analysis have derived the structure from the direct IO coefficient table. In more recent attempts, greater sophistication has been achieved by incorporating a degree of quantification into the qualitative analysis. Also, the concept of important coefficients (IC) has been used for the construction of the adjacency matrix. The present study is carried out along these lines for the Indian economy.     

Decomposing Input–Output Tables to Establish the Effects of Temporal Changes in Demographic and Economic Characteristics

This paper reports on an analysis of economic and demographic changes in the UK during the period 1981–91, using an extended input–output (IO) formulation designed to measure impacts of such changes in economic and demographic systems. We derive a simple temporal change decomposition method and apply it to the extended IO formulation. This is then linked to a labour market account decomposition, and the conjoint decomposition applied to two labour market accounts and two IO tables for the UK. We are able to identify the impacts on the demographic and economic systems caused by changes in the economy, economic activity of the population, natural population change, migration and coefficient shifts of different types.     

Sources of Structural Change in Input–Output Systems: A Field of Influence Approach

The analysis of structural change with input–output (IO) tables is extended beyond the initial ideas of Chenery and Watanabe, and beyond the recent applications of Feldman et al. and Dewhurst, to embrace a more comprehensive view. With this perspective, change is decomposed into three initial components, and these components are further divided into change initiated within the sector and outside the sector. The analysis is then linked with the notion of a ‘field of influence of change’ to provide a more complete view of the way in which changes penetrate the rest of the economic system. The analytical perspectives are illustrated with applications to a three-sector set of IO tables for the US economy for the period 1948–77.     

TESTING ASSUMPTIONS MADE IN THE CONSTRUCTION OF INPUT–OUTPUT TABLES

Product input–output (IO) tables are mainly constructed on the basis of product and/or industry technology assumptions. The choice is not trivial and deserves empirical analysis using input and output data at the level of establishments. This paper offers input–output compilers econometric tests to facilitate the construction of tailored hybrid technology-based product IO tables. We provide weighted likelihood ratios of the product and industry technology assumptions. Although the proposed econometric tests are aimed to be used ex ante, we construct four variants of hybrid technology-based product IO tables using establishment data from Andalusia (Spain) and contrast them to the official product IO table and the pure product and industry technology-based tables. Our econometric tests are not valid for industry IO tables.     

European Community Intercountry Input–Output Relations: Construction Method and Main Results for 1965–85

Eurostat constructs consolidated input–output (IO) tables for the European Community (EC) by means of an aggregation of the domestic and the intra-EC import matrices from the harmonized national IO tables. Intercountry EC IO tables can be constructed by disaggregating the intra-EC imports according to country of origin, with coefficients derived from international trade statistics. These procedures, however, produce inadequate outcomes for several reasons. The most important reason is that the imports are valued in ex-customs prices, instead of the theoretically more appropriate producers' prices. This paper analyzes the nature of these and other data problems, and describes a more extensive and satisfactory method to construct intercountry and consolidated EC IO tables. The empirical results are illustrated by an analysis of the domestic and intercountry intersectoral spillover effects for 1965–85.     

Extracting Embodied Energy Paths from Input–Output Tables: Towards an Input–Output-based Hybrid Energy Analysis Method

Embodied energy is defined as the energy consumed in all activities necessary to support a process, including upstream processes. The Leontief inverse input–output (IO) matrix gives results that are practically complete, because of the aggregation of direct and indirect requirements, but which are also unreliable, because of inherent assumptions. Although accurate for the system boundary considered, process analysis results are incomplete relative to the pure IO system boundary. Attempts to combine process and IO analysis tend to be based on process analysis data. The system boundary is still significantly incomplete—although not as incomplete as for pure process analysis. An IO-based hybrid analysis technique that requires the extraction of particular paths from the direct IO matrix has been developed. The potential for embodied energy paths to be used as the basis for a hybrid analysis of the Australian residential building sector is discussed. The results indicate that less than three-quarters of the total embodied energy of this sector is likely to be able to be validated, because of the complexity of the embodied energy paths.     

Structural change decomposition through a global sensitivity analysis of input–output models

Sensitivity analysis has become an important tool to test the robustness of estimated economic models. In this paper we propose the use of simulation-based sensitivity analysis to identify the fundamental structure of the economy. To show the possibilities of this technique, we provide empirical evidence on the path of structural change occurring in the Chicago economy by running simulations for projected input–output tables over the period 1975–2010.     

Input–Output Structural Decomposition Analysis: A Critical Appraisal

Over the past decade, input–output structural decomposition analysis (SDA) has developed into a major analytical tool. We review the development of SDA and its relationship to other methodologies. We present the fundamental principles of alternative approaches to deriving SDA estimating equations and explore the various decompositions of changes in IO tables. We also identify several complications and unresolved issues. Most importantly, we find that a rigorous grounding in economic theory is lacking for SDA, but we are able to offer some suggestions as to how it might be established.     

A SYMMETRIC INPUT–OUTPUT TABLE FOR EU27: LATEST PROGRESS

The European Commission is currently establishing an Environmentally Extended Input–Output (EE-IO) Database for the EU27 developed by the Joint Research Centre at the Institute for Prospective Technological Studies (IPTS). This project attempts to generate an analytical dataset comprising all EU countries and yearly time series for the period 1995–2005. Since, for the time being, IO and environmental accounts data are only available with significant gaps part of the dataset will require estimates based on best available proxy data and reasonable assumptions. This paper is focused on the IO database shaped around Eurostat supply and use tables and symmetric IO tables consistent with the NACE classification. The paper describes the procedure by which the latest preliminary results have been obtained for an aggregate EU27 symmetric input–output table for the year 2000.     

A Synthetic Approach to Projecting Input–Output Tables

This paper describes an approach used in the Canadian input–output (IO) accounts, which seeks to enhance the timeliness of the tables. It combines traditional updating methods, balancing techniques and the most recent data. To assess the performance of this approach, aggregate estimates from the synthetic accounts are presented for two years, and compared with estimates from benchmarks and with estimates obtained from a mechanical estimation technique. The results show that most IO components can be estimated with a relatively small estimation error and that substantial accuracy is gained from using the synthetic approach compared with a mechanical technique. Results based on data which are two years away from IO benchmarks are obtained at the cost of large errors. Synthetic estimates of the IO accounts improve the timeliness problem by at least a full year.     

How Japan–US Economic Interdependence Changed from 1985 to 1990: Some Findings from Price-adjusted MITI Intercountry Input–Output Tables

This paper consists of two parts. First, constant-price Japan–US intercountry input–output (IO) tables are compiled, based on Japan–US IO tables of the Ministry of International Trade and Industry (MITI) for 1985 and 1990, and the relative producer prices of both countries, which are estimated by the ‘peeling off’ method from OECD purchasing power parity data. Second, a factor decomposition analysis is carried out to show changes in Japan–US economic interdependence between 1985 and 1990. The Leontief inverse matrices of intercountry IO tables are decomposed into three matrices, which reflect domestic repercussion effects, spillover effects to the other country and feedback effects of own final demand from the other country. Then, a traditional decomposition analysis of changes in production for both countries is applied to see how both countries' economic interdependence changed. It is found that Japan–US economic interdependence moved from a pattern of Japan's dependence on the US to an almost equally interdependent pattern, although the degree of dependence was still higher in Japan in 1990. At the same time, there are significant industrial structural changes in the relationship between both countries, as a result of the significant appreciation of the yen relative to the dollar from 1985 to 1990.     

Structural Break,Indivisibilities and Input–Output Analysis

This paper sets up and analyses a model of structural break in the framework of input–output (IO) analysis. The idea of structural break is formalized in terms of an IO model where each commodity can be produced by two alternative technologies; one of which is subjected to technologically specified indivisibility in its level of operation. The analysis of the model consists of suggesting an iterative procedure for computing its solution and developing a necessary and sufficient condition for the existence of solutions. Some results have also been derived on the question of uniqueness of a solution.     

Process System Modelling of Production Technology Alternatives using Input– Output Tables with Sector Specific Units

Input–output analysis is usually based on tables of accounts expressed in uniform monetary or physical units. However, from a process system modelling perspective, tables of accounts in sector specific units may be more useful for evaluating the effectiveness of new production technologies on reducing pollutant emissions. Using the sector specific unit conceptualization of an IO table, one can consider the effect of changes in direct input coefficients for a particular sector on the complete set of total input coefficients independently from the other direct input coefficients. A process system modelling based method for calculating the total industrial outputs from a new technology matrix together with the new relative prices for each sector output is presented. The method is then used to study the effect of technology changes in the steel making industry in Liaoning Province, China on prices and pollutant emissions.     

A primal Divisia technical change index based on the output distance function

We derive a primal Divisia technical change index based on the output distance function and further show the validity of this index from both economic and axiomatic points of view. In particular, we derive the primal Divisia technical change index by total differentiation of the output distance function with respect to a time trend. We then show that this index is dual to the Jorgenson and Griliches (1967) dual Divisia total factor productivity growth (TFPG) index when both the output and input markets are competitive; dual to the Diewert and Fox (2008) markup-adjusted revenue-share-based dual Divisia technical change index when market power is limited to output markets; dual to the Denny et al. (1981) and Fuss (1994) cost-elasticity-share-based dual Divisia TFPG index when market power is limited to output markets and constant returns to scale is present; and also dual to a markup-and-markdown-adjusted Divisia technical change index when market power is present in both output and input markets. Finally, we show that the primal Divisia technical change index satisfies the properties of identity, commensurability, monotonicity, and time reversal. It also satisfies the property of proportionality in the presence of path independence, which in turn requires separability between inputs and outputs and homogeneity of subaggregator functions.     

European Technology,Trade and Income Changes for 1975–85: An Intercountry Input–Output Decomposition

This paper refines, develops and applies input–output (IO) decomposition analysis: by providing it with a unique intercountry perspective, by concentrating on explaining income growth, and by systematically separating the effects of trade structure changes from the effects of technology and preference changes. The resulting matrix formula distinguishes six components and is applied to a set of European Community (EC) intercountry IO tables for 1975 and 1985 with 25 sectors and eight EC countries. Because GDP growth is analyzed in nominal terms, macro-economic demand growth is found to be the most important component. The other five components relate to the effects of coefficient changes. Their sizes are smaller, but significant and widely different between sectors and countries, which shows that there is clear potential for effective sector policies.     

Some Relationships between T-Accounts,Input–Output Tables and Social Accounting Matrices

Some relationships between the T-accounting format for presenting commodity balances; input–output (IO) tables; and social accounting matrices are discussed in this paper. The starting point is to recognize that IO tables do not contain all the information that is needed to complete a social accounting matrix (SAM), or, therefore, for the modelling of phenomena that depend on having a fully articulated SAM, such as the interdependence of the distribution of income and the structure of production. There is a need, therefore, to establish the character of the extra information that is required and this can be achieved by imposing the requirement that a SAM should be consistent with the basic cash identity that is fundamental to all social accounting. A second agendum is to develop the argument that, while T-accounts can, in principle, provide a database equivalent to that of a SAM, in practice, they are typically found to be an imperfect substitute. It is important, therefore, in designing a database, to go beyond the confines of an (extended) IO system and T-accounts. SAMs provide an appropriate framework for doing so.     

FROM INPUT–OUTPUT TABLES TO SUPPLY-AND-USE TABLES

In 1991, Statistics Netherlands introduced the supply-and-use tables as part of the national accounts. Since then, the supply-and-use tables have been the main statistics on the production structure of the Dutch economy. They form the basis from which input–output tables are derived. The time series of supply-and-use tables starts in 1987. However, there is a need for a time series since 1970 because benchmark revisions of the Dutch national accounts would become far easier if such time series were available. Therefore, a method has been developed to derive supply-and-use tables from existing input–output tables. This article presents the algorithm.     

Environmentally Important Inter sectoral Flows: Insights from Main Contributions Identification and Minimal Flow Analysis

For the analysis of economic interdependences form an environmental perspective, a condensation of the information contained in input–output (IO) tables is desirable, but without much loss of the quantitative dimension. For the case of total energy requirements, main contributions identification is presented as an approach that allows a partitioning of total energy requirements by production layers and (final) energy-consuming sectors. For this purpose, a mixed monetary-energy IO model and a partitioning procedure are used. In addition, minimal flow analysis as a graphical method is used to detect importnant energetic interconnections. Environmentally Important Intersectoral Flows     

Alternative Approaches of Physical Input–Output Analysis to Estimate Primary Material Inputs of Production and Consumption Activities

In the last few years, a number of studies have been presented that link material flow accounting and input–output analysis (based on monetary input–output tables) for the calculation of direct and indirect resource inputs for production and consumption activities. The compilation of the first physical input–output tables for some European countries in the 1990s opened new possibilities for linking physical accounting and input– output analysis. Physical input–output analysis has so far only been applied for selected materials, but it has not been used for comprehensive assessments of material requirements of economic activities. In this paper, possibilities and limits of this new input–output approach are clarified. We present and discuss a procedure similar to monetary input– output analysis and develop an alternative approach to account for primary inputs and waste otherwise not included in the analysis. Based on aggregated input–output tables for Germany, we present numerical examples intended to compare the alternative approaches of physical input–output analysis.     

ON BRÓDY'S CONJECTURE: THEORY,FACTS AND FIGURES ABOUT INSTABILITY OF THE US ECONOMY

Bródy's conjecture regarding the instability of economies is submitted to an empirical test using input–output flow tables of varying size for the US economy, for the benchmark years 1997 and 2002, as well as for the period 1998–2011. The results obtained using input–output tables of various dimensions lend support to the view of increasing instability (in the sense of Bródy) of the US economy over the period considered. Furthermore, our analysis shows that only a few vertically integrated industries are enough to shape the behaviour of the entire economy in the case of a disturbance. These results may usefully be contrasted with those derived in a parallel literature on aggregate fluctuations from microeconomic ‘idiosyncratic’ shocks.