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.     

Return of the inoperability

There has been unrest in the research community investigating the inoperability of an economic system under disaster situations. The inoperability input–output model (IIM), which is very popular in the risk management field, has become a center of argument, particularly from the input–output researchers, that IIM is a straightforward application of the standard Leontief input–output model. This paper revisits the concept of inoperability, rather than IIM, and proposes its new role in disaster impact analysis using a conventional tool, i.e. the RAS method, for illustrating how the inoperability of an economic system in the aftermath of disaster can be evaluated. The proposed framework is employed to examine the inoperability of industries resulting from the 1995 Kobe earthquake. The findings of the analysis reveal the usefulness of inoperability concept that can even incorporate resilience (gained operability) using the proposed framework of this paper.     

Linkage Measures: a Revisit and a Suggested Alternative

This paper examines major linkage measures in the literature from different perspectives and attempts to clarify some of the controversies over them. The examination and clarification suggest more refined backward and forward linkage measures for linkage indices construction. The measures are then applied to analyse the linkages of Hawaii’s agriculture sectors.     

Tracing VARDI coefficients: a proposal

ABSTRACT

We propose a new approach for tracing the so-called ‘value-added-(re)distribution-important coefficients’ (in short the VARDI coefficients) in a world input–output model. From the perspective of a selected group of economies, VARDI coefficients may be defined as those elements in world input–output matrix in the case of which a small change in their levels leads to the maximization of a share of this group of economies in value added in global value chains. Due to the rapid development of the World Input Output Database, this approach may be easily applied in empirical research to different groups of countries and sectors in world IO models. In an illustrative empirical case study, we use the new approach in order to answer a question regarding what the main directions of the future macroeconomic policy of the U.S. could be in order to ensure the maximization of the country’s share in global value added.     

Drivers of change in the European youth employment: a comparative structural decomposition analysis

This paper uses a structural decomposition approach to examine the proximate causes of change in the EU15 youth workforce from 1995 to 2011. Besides the traditional sources considered by the literature, I include age-specific factors: a labor utilization index that accounts for the hours that employed youth work by showing the extent of part-time contracts; an age mix factor that indicates the share that youth comprise of total employment and, finally, changes in the inverse of the overall sectoral labor productivity, which describes variations in total labor demand. By applying this approach, I identify the core drivers behind the recent changes in the evolution of youth employment in each of the 15 countries; this is crucial for tailoring policy strategies. Results suggest that to foster youth employment, most Mediterranean countries should implement youth-specific measures while other EU15 countries could do so by enhancing overall employment.     

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.     

Structural Decomposition Techniques: Sense and Sensitivity

Structural decomposition techniques are widely used to break down the growth in some variable into the changes in its determinants. In this paper, we discuss the problems caused by the existence of a multitude of equivalent decomposition forms which are used to measure the contribution of a specific determinant. Although it is well known that structural decompositions are not unique, the extent of the problem and its consequences seem to have been largely neglected. In an empirical analysis for The Netherlands between 1986 and 1992, results are calculated for 24 equivalent decomposition forms. The outcomes exhibit a large degree of variability across the different forms. We also examine the two approaches that have been used predominantly in the literature. The average of the two so-called polar decompositions appears to be remarkably close to the average of the full set of 24 decompositions. The approximate decomposition with mid-point weights appears to be almost exact. Although this last alternative might seem a solution to the problem of the marked sensitivity, in fact, it only conceals the problem.     

Structural production layer decomposition: a new method to measure differences between MRIO databases for footprint assessments

Recent empirical assessments revealed that footprint indicators calculated with various multi-regional input–output (MRIO) databases deliver deviating results. In this paper, we propose a new method, called structural production layer decomposition (SPLD), which complements existing structural decomposition approaches. SPLD enables differentiating between effects stemming from specific parts in the technology matrix, e.g. trade blocks vs. domestic blocks, while still allowing to link the various effects to the total region footprint. Using the carbon footprint of the EU-28 in 2011 as an example, we analyse the differences between EXIOBASE, Eora, GTAP and WIOD. Identical environmental data are used across all MRIO databases. In all model comparisons, variations in domestic blocks have a more significant impact on the carbon footprint than variations in trade blocks. The results provide a wealth of information for MRIO developers and are relevant for policy makers designing climate policy measures targeted to specific stages along product supply chains.     

Does It Make Sense to Apply the Static Open Input–Output Model for Imputation and Structural Decomposition?

This paper aims to stimulate discussion on the question concerning whether input–output (10) analysts should go on applying the static open 10 model in times when data supply and computer capacity allow us to switch to semi-closed 10 models, which are rated as comparative improvements. It is argued that the most frequent of the open 10 model's applications, i.e. imputations and structural decompositions, with a switch to a semi-closed model, lose the properties which make them so attractive: imputations no longer are straightforward assignments of production and primary inputs to the components of total final demand; structural decomposition no longer is an additive assignment of changes of production and primary inputs to sources of structural change. In the author's opinion, imputations and structural decompositions on the basis of the open 10 model should be abandoned.     

Estimating the Accounting Price of Foreign Exchange: An Input–Output Approach

When adjustments in the foreign exchange market involve changes in the production of marginally traded goods, the traditional formula for calculating the accounting (shadow) price of foreign exchange assumes that domestic prices and marginal costs at efficiency prices for those goods are equal. In this paper, a method is proposed for estimating an accounting price ratio of foreign exchange in a partial equilibrium framework, abandoning that assumption. For that purpose, input–output techniques are used, to take into account the effets of changes in the production of traded goods.     

Bias and Sensitivity of Multipliers

Multipliers measure the derivatives of endogenous variables with respect to exogenous shocks and are functions of the structural parameters of an economic model. Substitution of the structural parameter estimates yields a so-called derived estimate for a multiplier or any reduced-form parameter. Derived estimates are biased. This paper presents first-order approximations to the biases and sensitivities of multipliers. The good performance of a flawed formula in input–output analysis is illuminated.     

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.     

Queensland State Impact and Projection Model: The Household Sector

The Queensland Impact and Projection model is an integrated input–output econometric model of the Queensland economy. Its purpose is to complement a conventional input–output model for analyzing economic impacts at the state level. This paper provides an overview of some of the methods used to model the household sector in an input–output framework, before describing the approach taken in the Queensland model. Some results which support the empirical performance of the model are also provided. It is demonstrated that the integrated model is a viable alternative and improvement on the conventional input–output model. The results are consistent with the static input–output model and conform to expectations about how the economy responds in real impact situations.     

Interregional Input–Output Modelling in Indonesia: A Constrained Growth Rate Approach with Endogenous Investment

In interregional input–output (IO) models, investment can be endogenized in many different ways, varying from dynamic Leontief-type solutions to computable general equilibrium (CGE) models. However, large versions of these models are difficult to implement because of the absence of the required data. In this paper, a different, less data-demanding treatment of regional investment is presented for an interregional IO forecasting model in which a simultaneous solution is given for regional GDP by industry, on the one hand, and for regional aggregate investment, on the other hand. In this way, investment plays its role as a disaggregate demand factor by industry and region, as well as being an aggregate supply constraint on regional capital stock at the same time. Some empirical results are presented for a 27-region model in Indonesia, which has been used by the government during the preparations for the new national 5-year plan for 1994–1999.     

Optimization in a Dynamic Leontief Model with Restricted Value Growth

The purpose of this paper is to develop a dynamic Leontief model of an msector economic system in which the production of all goods requires one time period and one primary factor, but no capital stocks of any good, and in which the total value of outputs from all sectors is required to grow at a specified rate in each period. The requirement of a fixed rate of total value growth is less restrictive than the familiar condition of balanced growth across all sectors, and it permits the definition and analysis of interesting finite-period optimization problems. Specific results of the paper include the following: (1) the proof that a value-added maximization problem with an unrestricted initial state will experience consumption in exactly one sector in each time period, and willyield an optimal value function which is linear in the variables that describe the terminal state of the system; (2) the development of an efficient Dantzig-Wolfe procedure for analysis of the total value-added maximization problem where both the initial and terminal states are specified; (3) the derivation of testable properties that will guarantee the attainability of a specified target state from a specified initial state of the system; (4) a formal comparison of some basic characteristics of total value growth and balanced value growth.     

Closing the Canadian Input–Output Model: Homogeneous vs Non-homogeneous Household Sector Specifications

This paper addresses, on both theoretical and empirical fronts, the task of endogenizing the household sector in a rectangular input–output (IO) model. The formulation of Miyazawa (1976) for square models is extended to the development of an impact matrix for rectangular models. This allows for the numerous household revenue sources to be built into the model. A closed model with non-homogeneous households is developed where individuals are modelled individually and by industry. The perform ance of the non-homogeneous household sector model is compared with a model that has a homogeneous household sector. The model with the non-homogeneous household sector is more sensitive to changes in wages and salaries than to changes in final demand.     

Infrastructure and Performance of the Italian Economic System

This paper aims to analyze the consequences for the Italian economy of the recently started process of modernization and extension of the country's infrastructure. The planned measures are expected to increase the competitiveness of Italian businesses, and to improve the quality of life. In the short term, investments in infrastructure will increase the construction sector's production and, consequently, activate income and employment multipliers. The Italian economic system being highly differentiated from a territorial viewpoint, the impact of new investments on its economic system has been analyzed by means of a biregional model that accounts for the peculiar productive structure of the 20 Italian regions.     

A flexible adaptation of the WIOD database in a virtual laboratory

ABSTRACT

The World Input-Output Database provides a time series of world input–output tables (WIOTs) that have been used for example to understand the manifold effects of the increased integration of markets through international trade. In order to enhance the flexibility of research on global trade issues using WIOD, we implement the WIOT workflow in a collaborative, cloud-based virtual laboratory environment. We demonstrate that a lab-based adaptation of WIOD is able (a) to continuously create and update versions of the WIOTs in a timely, consistent, and cost-effective way, (b) to enhance original information with accompanying information on standard deviations, and (c) to enable flexible re-casting of the entire WIOT time series into user-specific geographical and sectoral classifications.     

The Evolution of Production Structures,Analyzed by a Multi-layer Procedure

In this paper, a new method of so-called qualitative input–output analysis is outlined, which is called minimal flow analysis (MFA). It extracts the characteristic production structure given in an input–output table, on the basis of anendogenized threshold value. Formally, this is achieved by the binarization of the entries of different table layers which are reformulated according to the Eulerian sequence. The condensed characteristic structure of the economy is then obtained by means of graph theoretical methods. The new method is able to uncover production structures, even in highly aggregated tables. If applied to a chronological sequence of tables, as shown for German tables 1978–88 in detail, the MFA method can disclose the evoluton of sectoral structures.     

Reducing Brazilian greenhouse gas emissions: scenario simulations of targets and policies

This paper aims to evaluate the economic impacts of greenhouse gas emission reduction on the Brazilian economy. To this end, we developed an integrated input–output linear programming model for 2009 using the Supply and Use Tables and emissions data of the Brazilian Ministry of Science and Technology and Innovation. We simulated emissions targets for various potential scenarios in which the adopted policy design took account of sectoral composition in terms of emissions and available production technology. The results were directly affected by the high level of livestock emissions, counterbalancing this sector’s economic importance for Brazil. In the short term, sectoral emissions targets associated with taxation policy or emission permits could be developed in order to create private incentives to mitigate emissions. In this sense, the results also show that different sectoral targets may be able to balance environmental benefits with the possible economic losses incurred by such policies.