A Revision of the Tolerable Limits Approach: Searching for the Important Coefficients |
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| Authors: | Miguel ángel Tarancón Fernando Callejas Erik Dietzenbacher Michael L. Lahr |
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| Affiliation: | 1. Faculty of Law and Social Sciences , University of Castilla-La Mancha , Ciudad Real, Spain;2. Faculty of Economics and Business , University of Groningen , The Netherlands;3. Regional Economics Applications Laboratory (REAL) , University of Illinois at Urbana-Champaign , USA;4. Center for Urban Policy Research , Rutgers University , New Brunswick, NJ, USA |
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| Abstract: | A wide range of approaches are available for classifying coefficients according to their importance to an economy. The ‘tolerable limits’ approach is one that has been extensively written about. Nevertheless, it seems unsuitable for assessing the overall importance of a coefficient to an economy, but instead appears to be rather well suited for determining how much a selling sector depends upon its customers. We therefore suggest two alternative approaches for measuring a sector's importance to an economy. The first is an application of the concept of elasticity based on Sherman and Morrison's (1950) formula. The second approach applies linear programming. We compare these various alternatives using the domestic IO tables of eight European countries. |
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| Keywords: | Tolerable limits elasticity linear programming important coefficients |
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