THE COMPILATION OF CHINA'S INTERREGIONAL INPUT–OUTPUT MODEL 2002

The increasing economic interaction among various regions in China makes the construction of an interregional input–output table relevant for economic studies. This paper elaborates the model compilation procedure of the China Interregional Input–output model 2002. The key features of the model compilation include: (1) using representative commodities to estimate the interregional commodity flows of the primary industries; (2) adopting functions to estimate the decreasing interregional transportation of manufacturing sectors in relation to distance and (3) selecting appropriate indicators to estimate the interregional commodity flows of non-material sectors. This study is an initial attempt in interregional input–output modelling and might be helpful for economic studies at the levels of micro-regions.     

REGIONAL WATER FOOTPRINTS OF THE YANGTZE RIVER: AN INTERREGIONAL INPUT–OUTPUT APPROACH

Recently, researchers have applied the multi-regional input–output (MRIO) approach to water footprint (WF) analysis. The concept of interregional input–output (R-MRIO) was developed to analyse regional issues. Researchers have concentrated on the development of global or international input–output (N-MRIO) tables. Using the N-MRIO and the R-MRIO approach allows the study of global and regional issues, respectively. The WF is an indicator influenced by trade among nations and regions. However, the treatment of imports in an R-MRIO approach differs in whether international imports are separated or combined. We evaluate the effects of the difference between these models and discuss policy implications for the Yangtze River, China. The WF calculated using the combined type model is 11% larger than that by the separated type model. This difference can be ascribed to international imports, mainly internal consumption and interregional trade. We find that this difference affects social equity in water-abundant areas.     

A Simple Multi-Regional Input–Output Account for Waste Analysis

The present paper provides a simple multiregional input–output model for waste analysis with which to estimate intraregional and interregional effects of industrial wastes embodied in regional final consumptions. The empirical analyses using 1995 nine-regions input–output tables reveals the regional properties of the interregional linkage effects. The Kanto and Kinki regions remarkably control the industrial waste emissions and waste landfills within their own regions by importing waste-intensive intermediate goods and services from the other regions. The Chugoku and Shikoku regions greatly contributed to the production of the waste-intensive goods and services for the other regions, considering the waste emissions and waste landfills relative to the commodity production levels. We also find that the household consumption behaviour in other regions indirectly plays a more important role in waste emissions than the municipal waste disposal behaviour in the region in question at least in 1995.     

Spatial and sectoral characteristics of China’s international and interregional virtual water flows – based on multi-regional input–output model

This paper provides a systematic analysis of spatial and sectoral characteristics and changes in virtual water flows associated with China’s interregional and international trade based on the China interregional input–output tables of 2002 and 2007. The results show significant improvement in water use efficiency between 2002 and 2007. However, the general spatial patterns and sectoral components of virtual water flows have more or less remained during the period. Almost all Chinese provinces are net exporters of virtual water in international trade. In interregional trade, the dominant direction of virtual water flow is from peripheral provinces to eastern coastal provinces. The agricultural sector plays an important role in shaping this direction and has significant impacts on water uses in exporting provinces, some of which are water scarce. The results of this study clarify some confusions concerning mismatches between regional water endowments and virtual water trade within China and with other countries.     

Corporate hedging and input price risk

Input price variability is an important source of risk for corporations that process raw commodities. Models of optimal input hedging are developed in this paper based on the maximization of managerial expected utility. The relationship between hedging strategies and output decisions is examined to assess the impact of the ability to set output prices on futures market participation. As a firm's ability to set output prices diminishes in the short run, input futures positions increase although the optimal hedge ratio may either increase or decrease. For a perfectly competitive firm, however, shifts in output price caused by input price changes provide a natural cash market hedge of input price risk and reduce the firm's optimal input futures position.     

On estimating trade flows in interregional input output models

Non-survey techniques have previously been devised for adjusting regional technical requirements matrices so as to account for commodity imports. Surrogates such as the location quotient have been utilised for estimating trading coefficients in a regional input output table. Extensions of these techniques to an interregional system are generally considered. It is shown that non-survey techniques are conceptually improved as a result of this extension. Particular regard is given to calibration methods that achieve consistency between estimates of exports and imports within an interregional system. The RAS method and some variants are compared and an additive algorithm is demonstrated to be efficient for this purpose.     

How do interregional spillovers influence the distribution of technology? The case of Chinese manufacturing

The Chinese economy displays considerable inequality across regions. In this paper, we analyzed the distribution of intermediate input shares in China. We use regional input–output tables from 2007 and find that regions with higher GDP per capita generally had higher input shares, regardless of sector. Then, using intermediate input shares as a proxy of technology, we analyzed the pattern of regional technology distributions across manufacturing sectors as well as the extent of interregional technology spillovers. Our results indicate that interregional backward spillovers have significantly positive impacts on the shape of the technology distributions in eastern (coastal) regions. By contrast, the vertical spillovers of the central and western regions are largely dominated by intra-regional forward effects. Our results suggest that the shift of Chinese manufacturing from coastal to inland regions with lower production costs cannot reduce the imbalance among regions unless the technology gap is narrowed.     

A POST-KEYNESIAN AGE MODEL TO FORECAST ENERGY DEMAND IN SPAIN

This paper develops an extended input–output model for the estimation of energy demand and related issues. It is built on the last Spanish Symmetric Input–Output Table (IOT, 2005). It has been tested for the period 2005–2008 and used for forecasting energy demand for the years 2009–2012 under different economic scenarios. The model shares some traits of the computable and applied general equilibrium models where quantity and price systems are interwoven. The differences lie in the theories explaining output and prices. Our quantity system is based on Keynes’ principle of effective demand (broad energy multipliers are derived). The price system is based on the classical (Sraffian) theory of prices of production, akin to post-Keynesian full-cost prices. The general price system can be manipulated to account for the specificities of energy prices. Historical trends of energy coefficients are computed by extrapolation of past IOTs and calibration.     

SPATIAL PRICE EQUILIBRIUM AND THE TRANSPORT SECTOR: A TRADE‐CONSISTENT SCGE MODEL

In spatial computable general equilibrium models, interregional trade ought to play an important role in determining the spatial price equilibrium. Although the Armington assumption is commonly employed to describe cross‐hauling, many of the existing models do not explicitly consider the behavior of transport firms. This paper presents a framework that is compatible with the Armington assumption and explicitly considers transport activities. In the model, the trade coefficient takes the form of a potential function, and the equilibrium market price becomes similar to the price index in the context of new economic geography. The features of the model are investigated by using the minimal setting, which comprises two nontransport sectors and three regions. Because transport costs are given exogenously, the commodity prices are determined relative to them. The model can be described as a system of homogeneous equations, where an output in one region can arbitrarily be determined similarly as a price in the Walrasian equilibrium.     

Intercountry feedback and spillover effects within the international supply and use framework: a Bayesian perspective*

This paper proposes a new framework for the estimation of product-level global and interregional feedback and spillover (FS) factor multipliers. The framework is directly based on interregional supply and use tables (SUTs) that could be rectangular and gives a possibility of taking account of the inherent input–output data uncertainty problems. A Bayesian econometric approach is applied to the framework using the first version of international SUTs in the World Input–Output Database. The obtained estimates of the global and intercountry FS output effects are discussed and presented at the world, country and product levels for the period of 1995–2009.     

Make and Use Approaches to Regional and Interregional Accounts and Models

Institutional, or sector-by-sector input–output tables have traditionally been used in regional and interregional modelling. This paper examines the origins of this tradition and argues instead, both theoretically and empirically, for the integration of make and use submodels within models of production, demand and interregional trade, outlining the manner in which they can be integrated. Further, it is argued that structural rather than reduced-form models represent a sounder theoretical base. Finally, a Danish interregional model (LINE) based on a social accounting matrix framework that employs these principles is presented. The paper also deals with the issue of data construction at the regional and interregional levels, based on the make and use approach. It is argued that when data are constructed at a low level of sectoral and spatial aggregation under accounting consistency constraints, data quality and validity are high.     

CONSTRUCTION OF MULTI-REGIONAL INPUT–OUTPUT TABLES USING THE CHARM METHOD

Subnational multi-regional input–output tables (IOT) are important tools for studying interregional socio-economic and/or environmental interrelations that help to address a wide range of current societal, ecological and economic challenges. However, the lack of subnational input–output data is a major obstacle which leads to a wide use of non-survey methods. Like other non-survey methods, the cross-hauling adjusted regionalization method (CHARM) was originally developed for the construction of single-regional IOT. In this paper, we extend CHARM to the case of bi- and multi-regional IOT. We find that the original CHARM formula has two limitations that are also of great importance for the single-regional case: First, cross-hauling in interregional trade is implicitly set to zero and, second, accounting balances may be violated owing to structural differences between the regional and national economies. We present a modified formula addressing these issues and examine its performance in terms of a case study.     

A Consistent Formulation of the Leontief Pollution Model

We consider the environmental Leontief model, which is an input–output model augmented by pollution-generation and pollution-abatement sectors. Two formulations of this model, dating back to Leontief's work in 1970, can be found in the literature. One formulation treats an exogenously given vector of the tolerated level of pollutants (environmental standards) as a negative variable on the right-hand side of the model. The other formulation supposes that each industry eliminates a given proportion of the pollution that it creates, so that the proportions of gross pollutants which are subject to treatment by each sector enter as given parameters. Even in the case when the levels of production and abatement in the two different model formulations are equal, the solutions of the dual or price model are different for cases where some net pollution is left untreated. First, the analytical relationship between the two price models is established. Secondly, both models formulated in a linear programming framework are extended by imposing emission charges (effluent taxes) for untreated pollution. Finally, it will be shown how to estimate the level of emission charges for both model formulations such that they provide the same levels of production and abatement, as well as the same shadow prices. This is illustrated by a numerical example.     

Decomposition of Structural Change into Technology and Price Components: Turkey, 1973–85

The purpose of this paper is to report on an approach to the analysis of intertemporal change in input–output tables in terms of the components of this change with time. We define two alternative forms of decomposition: additive and multiplica tive. The multiplicative form is found to have advantages over the additive form: it is not affected by the choice of price-adjusting mechanism and it enables us to define summary measures in the line of, for example, direct backward linkages. We apply the methodo logy to input–output tables for Turkey for 1973 and 1985, and compute the components of total change for 1973–85. We illustrate that, in economies where price changes across industries vary to a great extent, studying structural change first requires the removal of the relative price effects. Otherwise, misleading conclusions regarding the real or tech nological change are very likely.     

Prices and factor demand in an endogenized input–output model

This paper combines factor demand functions (for intermediate input and labour) and price equations (derived from a Generalized Leontief cost function) with the traditional input–output price model. The cost functions determine factor demands for materials and labour as well as output prices at given input prices. At the second level of aggregation, the intermediate demand as a single input is split proportional to the elements in the column of the technical coefficients matrix. The emphasis in this endogenization of technical coefficients is on two features. First, the repercussion of output on input prices, and, second, the link between the econometric model for the supply side and the input–output demand model.     

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.     

Analysing Materials and Energy Flows in an Industrial District using an Enterprise Input–Output Model

Recent approaches to sustainable development leave much room for policies at a local level. In fact, it is becoming evident that targets such as increasing resource productivity, preserving natural cycles, or extending the present level of welfare, are best pursued within the confines of a local area. In particular, environmental changes are best brought about by considering local systems of firms as cornerstones of cooperative strategies and using data on materials and energy use in physical terms. In this paper, an enterprise input–output model is developed for an industrial district, i.e. a local group of firms specialized in the production of a single final output. The model allows for a detailed quantitative analysis of materials and energy flows and the consequent generation of waste and pollution. As a planning tool, the model may be used to evaluate alternative scenarios, such as the possibility of re- using waste taking account of sustainability requirements. An empirical case study applies the model to an industrial district in Southern Italy producing leather sofas.     

Hypothesis of Price Formation in Input–Output Tables

The goal of this paper is to check if different theoretical approaches to price formation can be verified in the structure of empirical input–output tables. From a propositive point of view, the hypothesis is made of two different markets (the ‘industrial’ market of intermediate and investment goods; and the ‘commercial’ market of final consumption goods), with two different mechanisms of price formation. The consequences of this hypothesis are outlined as regards deflation procedures. An empirical test of the theories about price formation and of the method of deflation suggested by the two-market hypothesis is made using 1985 Italian input–output tables at 1980 prices.     

A note on distortions from estimating the regional impacts of exogenous changes in output

This paper demonstrates both theoretically and empirically that when outputs instead of final demands are exogenously predetermined, the traditional Leontief final demand model overestimates economic impact, and even more so in a multiregional context. We assess this premise vis-à-vis the Leontief output model using the 2013 interregional input–output table of the Republic of Korea. We find that from a multiregional perspective the standard Leontief final demand model yields substantially biased output multipliers for Chungbuk Province.     

Appropriate assumption on cross-hauling national input–output table regionalization

Input–output tables are useful for regional economic analyses. Although scholars often regionalize national input–output tables, cost-related issues make surveying regional trade flow difficult; hence, non-survey approaches are implemented instead. While location quotient (LQ) approaches have been used widely, they ignore cross-hauling in interregional trade. Therefore, alternative non-survey approaches with different assumptions on cross-hauling are used, such as cross-hauling depends on regional size and cross-hauling is proportional to its potential determined by output or demand. This study concludes that the most appropriate assumption, as per the relative performance of non-survey approaches, is that cross-hauling is in proportion to trade volume.