Use Tables for Imported Goods and Valuation Matrices for Trade Margins— an Integrated Approach for the Compilation of the Belgian 1995 Input–Output Tables

This paper describes the compilation of the use table for imported goods and the valuation matrix of trade margins for Belgium in 1995. It introduces the methodological novelty of integrating the compilation of both tables and systematically exploiting the fact that large import and export flows do not generate trade margins. This is notably the case for direct imports for intermediate consumption or investment by non-traders, and direct exports by producers. For identifying these trade flows, extensive use was made of intrastat and extrastat data. The results are compared with those of a proportional distribution of imports and trade margins. Many statistical offices resort to the latter approach because of a lack of survey data on the destination of trade margins and imports. We demonstrate that the integrated approach can improve the quality of both the import matrix and the valuation matrix for trade margins, while using only existing data sources.     

Structural analysis of international trade: Environmental impacts of Norway

Final demand purchases initiate production processes that ultimately lead to environmental impacts. With the increase in international trade, many production processes occur outside of the country of final consumption. Whilst several studies have evaluated the pollution embodied in consumption and trade flows, few studies have investigated the structural linkages between domestic consumption and production in foreign regions. In this article we apply three complementary approaches to study the production network leading from the Norwegian economy to domestic and international environmental impacts: (1) the consumption perspective identifies final demand purchases that produce environmental impacts; (2) the production perspective identifies the production processes generating the pollution for a given demand; and (3) structural path analysis is used to provide the linkages between the global production networks linking consumption and production. We find that the three approaches provide different, but complementary information. For policy to focus on both sustainable consumption and production, all three approaches are required to fully identify environmentally important sectors in an economy.     

The exchange rate and machinery and equipment imports: Identifying the impact of import source and export destination country currency valuation changes

This paper presents estimates of the impact of exchange rate movements on the quantity of machinery and equipment imports. Many countries have become increasingly reliant on imports of these types of products and evidence in a number of studies indicates that investment in machinery and equipment contributes to improved productivity and growth. Unlike previous studies, this study differentiates between exchange rate movements with respect to machinery and equipment import source and final good export destination countries. Data are employed for two machinery and equipment importing countries, Australia and Canada, and two exporting countries, Japan and the U.S. The results indicate that a currency depreciation with respect to an import source country has a significant negative effect on the quantity of machinery and equipment imports, while a depreciation with respect to a domestic final good export destination country has a significant positive effect. These findings imply that the net impact on the quantity of machinery and equipment imports of an exchange rate change with respect to a particular country will depend on the extent to which that country is a supplier of machinery and equipment imports and a market for domestic exports.     

The Demand for Intermediate Goods in an Input–Output Framework: a methodological note

This methodological note suggests the use of the maximum eigenvalues of the matrices of the direct input–output coefficients and of the coefficients of vertically integrated sectors as indicators of the aggregate intensity of the demand for intermediate goods. Such indicators have the desirable property of being independent from both relative prices and the composition of final demand and reflect therefore only the structural characteristics of the productive system.     

Promoting investment in the Turkish construction sector: a structural path analysis

The construction sector in Turkey boomed in the period between the turn of the millennium and the onset of the global crisis. This paper studies the employment generation effects of growth of this sector, taking into account that it not only depends on domestic production factors but also on imported inputs. In order to unravel the interactions of the construction sector with the rest of the economy, structural path analysis of both labour and imported intermediate input demand generation is used based on the 2002 and 2009 WIOD data for Turkey. The findings indicate that labour linkages weakened between 2002 and 2009, while import linkages became slightly stronger. The sectors that have played key roles in this are identified, as are the linkages between these. The findings have implications for the persistent unemployment and current account deficits in Turkey.     

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.     

Introducing the supply side into the LBS Model

This Briefing Paper describes a new version of the London Business School model, which incorporates our most recent research on the supply side. The changes reflect the desire to improve the specification of the supply-side of the model, and to capture the effects of taxes on the incentives to save, invest and to work, while still retaining the basic features of the income-expenditure framework. The main features of the new model are: - Gross domestic product is determined as the sum of the outputs of five sectors. Previously GDP was determined by the demand side as the sum of the expenditure components. - Domestic demand for the output of the private sector depends on domestic absorption and on the price of this output relative to import prices. Overseas demand for exports depends on world economic activity and on the price of exports relative to the world price of exports. - Supply depends on the capital stock, real unit labour costs and real raw material prices. In the short run, input prices are allowed to affect the mix between goods which are exported and those which are supplied to the domestic market. In the long run, however, the mix depends only on the price of exports relative to the price of domestically supplied goods (i.e., relative profitability). - In the short run, disequilibrium in the goods market is reflected in adjustments to prices, inventories and the external balance. - Since gross domestic product is determined by summing the output of each sector, output decisions are reconciled with expenditure decisions by making imports the difference between final expenditure and aggregate supply. - In the long run, increases in government expenditure crowd out private expenditure, but the effect takes several years to come through. - A cut in corporation taxes which is not financed by higher taxes elsewhere boosts the supply side by raising investment and the capital stock, but not by enough to raise revenues sufficiently to pay for the tax cut. Private sector saving increases but not by enough to fund higher public sector borrowing, so the current account goes into deficit. - In the short run, both supply and demand factors influence economic activity; in the long run, the path of the economy depends only on population growth, capital accumulation and technical progress.     

GREENHOUSE GAS EMISSIONS AND ECONOMIC STRUCTURE IN URUGUAY

Using input–output analysis, we identify the key sectors in greenhouse gas (GHG) emissions of the Uruguayan economy. The responsibilities of each sector in terms of its emissions are decomposed into an own component, generated during the activities of the sector, and an indirect component, generated by the induced activities in other sectors. This has important implications for the design of mitigation polices, as the appropriate policy measures are contingent on the nature of the pollution. Technical improvements and best practices are effective only when applied to directly polluting sectors, while demand policies may be more appropriate for indirectly polluting sectors. In addition, we analyze pollution generated during the production of exports. The results show that demand policies are going to be effective in the Building, the Hotel and restaurants, and the Wholesale and retail trade; and repair of motor vehicles and motorcycles sectors. These policies complement GHG emissions’ mitigation policies in directly polluting sectors (mainly the Cattle farming and the transport-related sectors). Finally, methane and nitrous oxide emissions are mainly the consequence of production for exports, while carbon dioxide emissions are mainly driven by production for domestic consumption.     

The Economic Impacts of Newly Irrigated Areas in the Ebro Valley

This paper uses regional input-output tables to analyse the long-term impact resulting from the implementation of the newly irrigated areas provided for under the terms of the Ebro Basin Hydrological Plan. We have described the whole process by way of two consecutive stages. In the first, where the final demand is fixed, we use a demand-driven input-output model and we incorporate technical change through the reduction of the coefficients. In the second, the output of all sectors increases, with the increases in the vector of output being proportional to the forward linkages vector of the Agriculture sector. In this stage, our objective is to obtain a final demand vector that ensures that the agricultural value added increases to a prescribed value of v 1 *. Whilst the results demonstrate the positive effects of the transformation, they also reveal effects of a very different character in each sector. Thus, the Agriculture, Livestock and Agri-food industry sectors show significant increases in their gross outputs caused by the forward effects, whilst the Energy, Metal and Chemicals sectors reduce their outputs. These results shed light on the contradictory nature of the processes of development and technical change.     

An input–output model of exchange-rate pass-through

The impact of the exchange rate on price formation is often debated through a mechanism called the exchange-rate pass-through. Studies of the pass-through generally rely on econometric analysis implemented on time series data. This study examines pass-through to the domestic price level through an input–output model. The proposed model is implemented on a sample of countries, and a number of different variables connected to the pass-through are examined. A comparison across countries and sectors highlights the importance of the construction sector in price formation. National income is negatively related to the pass-through. A high dependence on intermediate imports implies higher pass-through. Price level volatility and pass-through are positively related; whereas a country’s monetary policy stance has no apparent effect. The effect of exchange-rate volatility is unclear; it is negative for the real effective exchange rate, the connection is very weak in the case of the nominal exchange rate.     

A CARBON FOOTPRINT TIME SERIES OF THE UK – RESULTS FROM A MULTI-REGION INPUT–OUTPUT MODEL

The framework and results of an international multi-region input–output (MRIO) model for the UK are presented. A time series of balanced input–output tables for the UK was constructed for the period 1992 to 2004 by using a matrix balancing procedure that is able to handle conflicting external data and inconsistent constraints. Detailed sectoral and country-specific trade data for the UK were compiled and reconciled with the UK input–output data, and economic and environmental accounts for three world regions were integrated in a UK-specific MRIO model. This was subsequently used to calculate a time series of national carbon footprints for the UK from 1992 to 2004. Greenhouse gas emissions embedded in UK trade are distinguished by destination of imports to intermediate and final demand. Most greenhouse gases show a significant increase over time in consumer emissions and a widening gap between producer and consumer emissions. Net CO₂ emissions embedded in UK imports increased from 4.3% of producer emissions in 1992 to a maximum of 20% in 2002. The total estimated UK carbon footprint in 2004 was 730 Mt for CO₂ and 934 Mt CO₂ equivalents for all greenhouse gases.     

DISAGGREGATING INPUT–OUTPUT MODELS WITH INCOMPLETE INFORMATION

Disaggregating a sector within the Leontief input–output (IO) framework is not a straightforward task since there is more than one possibility for the unknown technical coefficients of the disaggregated IO table, and more information than what is embodied in the aggregated IO table is thus required. This paper presents a methodology for disaggregating sectors into an arbitrary number of new sectors when the only available information about the newly formed sectors is their output weights. A random walk algorithm is used to explore the polytope containing the admissible combinations for the unknown technical coefficients of the disaggregated IO table. These combinations are then used to construct the probability distribution of the coefficients of the inverse Leontief matrix. The methodology is illustrated by disaggregating the electricity production sector of China's 2007 IO table and by looking at the probability distribution of the CO₂ emission intensity factors of the sectors of the economy.     

A regional planning model and its application to South Eastern Australia

A mathematical regional planning model is developed primarily for Australian conditions but is sufficiently general for applications elsewhere. The model has an input-output framework with constraints on labour, production, investment, exports and imports, and consumption. The objective function of the model includes production, labour, intermediate demand, consumption, investment, export and import terms (all linear) plus transportation cost terms (quasi-quadratic). The objective and the constraints may be manipulated to reflect various community goals such as maximize exports minus imports, minimize or constrain unemployment, minimize investment, etc.     

A Generalized Input-Output Multiplier Calculus for Australia

A static, generalized input-output framework for calculating simple multipliers is presented for Australian data. In this framework, capital investment and imports are internalized into domestic inter-industrial intermediate demand, non-square matrices are introduced in order to enable the inclusion of finer detail commodity data, and matrices in both monetary and physical units are employed. A range of labour and energy multipliers are calculated, referring to total output, final demand, final consumption, basic values, producers' prices, purchasers' prices, commodities and industries. Uncertainties of multipliers are assessed in detail, using Monte Carlo simulations.     

Trade,technology and skills: Evidence from Turkish microdata

In this paper we report evidence on the relationship between trade openness, technology adoption and the relative demand for skilled labour in the Turkish manufacturing sector, using firm-level data over the period 1980–2001. In a dynamic panel data setting, using a unique database comprising data from 17,462 firms, we estimate an augmented cost share equation whereby the wage bill share of skilled workers in a given firm is related to international exposure and technology adoption.It emerges that R&D expenditures are positive and significantly related to skill upgrading. This result supports the skill-biased technological change argument in the case of a middle-income country such as Turkey.Moreover, the firm-level analysis reveals a positive impact of technological transfer from abroad, foreign ownership and exporting status on the demand for skills, highlighting the role of increasing international openness in fostering skill upgrading within firms.Our microdata also allow us to investigate the direct impact of import flows in shaping the relative demand for skills. The results show that those firms belonging to the sectors experiencing rapid increase in the share of inputs imported from industrialised countries also experience a higher increase in the labour cost share of skilled workers. This finding provides further support for the hypothesis that imports from industrialised countries imply a transfer of new technologies, in turn leading to a higher demand for skilled labour (the so-called skill-enhancing trade hypothesis).     

生产者服务进口对中国就业效应的实证研究

通过对生产者服务进口影响中国就业的效应进行实证研究发现,长期而言,生产者服务进口额每增加1%,服务业的就业将会增加0.24%,但对制造业就业并没有显著影响。其中,信息服务进口对服务业和制造业就业都没有显著影响;交通运输服务进口额每增加1%,制造业(服务业)的就业水平将会增长0.147%(0.275%);其他商业服务进口额每增加1%,服务业的就业水平将增加0.189%,但对制造业就业没有显著影响。短期而言,生产者服务进口对就业同时产生促进效应,但效应较小。政府应降低生产者服务进口壁垒以促进国内就业水平的提高。     

Productivity Changes and Changes in the Requirements of Imports in the Swedish Economy, 1957–1980: an Input–Output Study

The present paper reports on a study where Swedish input–output data are exploited for the first time to analyse changes over time in the requirements of labour, capital and imports per unit offinal output. Individual commodity groups and the whole of the economy are objects of analysis within the framework of the Leontief open static model. Total labour coeflcients declined for all but one of 26 commodity groups. Changes in the intermediate structure are in general of less importance than changes in direct labour coefficients. The hypothesis that imports were substituted for labour or labour-intensive domestic intermediates finds support in the data analysed. The increasing capital/labour ratios observed harmonize with the increasing costs of labour also registered for the period of study.     

Potential impacts of the devaluation of Nepalese currency: A general equilibrium approach

This paper measures the potential impacts of the devaluation of domestic currency of the small, developing, landlocked and transition South Asian economy of Nepal, which is lagging behind in policy studies. The impacts on growth, distribution, price changes in factor and product markets, and on selected macroeconomic features are measured. Using a computable general equilibrium model applied to social accounting matrix data, we conclude that devaluation is expansionary but mostly benefits the rich, thus leading to a more uneven income distribution. In general, the expansion of economic activities occurs in agricultural and industrial sectors, whereas services activities contract. However, when the rate of devaluation is high, the agricultural sector also starts contracting. To this typical developing economy, devaluation causes an improvement in saving investment and export/import ratios, whereas the budget deficit widens.     

Distributed lags and intermediate good imports

In this paper we draw upon some recent developments in the theory of dynamic economics and econometrics to characterize the time series behavior of intermediate good imports. It is shown that adjustment costs, delivery lags, and inventory holding costs considerations lead to distributed lag import demand functions that are not subject to the Nerlove (1972) and Lucas (1976) critiques of ad hoc and fixed distributed lag modelling.     

Sources of Structural Change and Output Growth of China's Economy: 1987-92

This paper examines the sources of structural changes in output growth of China’s economy over 1987–92 using a decomposition method within the input-output (IO) framework. The model uses three comparable IO tables of 1987, 1990, and 1992 as the main data sources; it accounts for output changes from a demand side perspective and decomposes the growth of output into consumption demand, investment demand, export, import, and intermediate use (indicated by changes in IO coefficients). Special attention is given to identifying the effects of government policies on economic growth and structural change. It is found that overall output growth was multi-components driven rather than single-factor led; the share of the contribution to output growth from consumption and investment expansion declined and that from export and import increased. Whilst the efficiency of factor utilisation remains an issue of further research, a remarkable rise in IO coefficient share indicates a deepening and strong interdependence between industrial sectors over the data period. This revised version was published online in July 2006 with corrections to the Cover Date.