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The Problem of Negatives Generated by the Commodity Technology Model in Input–Output Analysis: A Review of the Solutions

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  • Thijs ten Raa
  • José Rueda-Cantuche

Abstract

Many economic models (e.g., computable general equilibrium models, econometric input–output models) revolve around a matrix of technical coefficients. However, these matrices can be estimated only once every 5 years as long as they are calculated from input–output tables and these are only published on a 5-year basis. Alternatively, use and make (or supply) tables are being regularly published on a yearly basis. However, they need to be converted into input–output tables as a previous step to form the matrix of technical coefficients. In doing so, this paper aims to shed light on the construction process of input–output tables and to guide economic modelers in making a decision on the way to make such conversion and how to deal with the subsequent problems, particularly with negative technical coefficients. JEL Classification: C67, D57. Copyright T. ten Raa, J.M. Rueda-Cantuche; licensee Springer 2013

Suggested Citation

  • Thijs ten Raa & José Rueda-Cantuche, 2013. "The Problem of Negatives Generated by the Commodity Technology Model in Input–Output Analysis: A Review of the Solutions," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 2(1), pages 1-14, December.
    • Handle: RePEc:spr:jecstr:v:2:y:2013:i:1:p:1-14:10.1186/2193-2409-2-5
    DOI: 10.1186/2193-2409-2-5
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    1. Louis De Mesnard, 2004. "Understanding the Shortcomings of Commodity‐based Technology in Input–Output Models: an Economic‐Circuit Approach," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 125-141, February.
    2. Thijs ten Raa & José Manuel Rueda-Cantuche, 2009. "The Construction of Input–Output Coefficients Matrices in an Axiomatic Context: Some Further Considerations," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 6, pages 77-101, World Scientific Publishing Co. Pte. Ltd..
    3. Joe Mattey & Thijs ten Raa, 2009. "Primary Versus Secondary Production Techniques in U.S. Manufacturing," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 16, pages 285-305, World Scientific Publishing Co. Pte. Ltd..
    4. Joe Mattey & Thijs ten Raa, 2009. "Primary Versus Secondary Production Techniques in U.S. Manufacturing," World Scientific Book Chapters,in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 16, pages 285-305 World Scientific Publishing Co. Pte. Ltd..
    5. J. Harvey Edmonston, 1952. "A Treatment of Multiple-Process Industries," The Quarterly Journal of Economics, Oxford University Press, vol. 66(4), pages 557-571.
    6. ten Raa, Thijs & van der Ploeg, Rick, 1989. "A statistical approach to the problem of negatives in input-output analysis," Economic Modelling, Elsevier, vol. 6(1), pages 2-19, January.
    7. Thijs ten Raa & José Manuel Rueda-Cantuche, 2009. "A Generalized Expression for the Commodity and the Industry Technology Models in Input–Output Analysis," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 7, pages 103-109, World Scientific Publishing Co. Pte. Ltd..
    8. José M. Rueda-Cantuche & Thijs ten Raa, 2021. "The Choice of Model in the Construction of Industry Coefficients Matrices," World Scientific Book Chapters, in: Efficiency and Input-Output Analyses Theory and Applications, chapter 16, pages 271-287, World Scientific Publishing Co. Pte. Ltd..
    9. Clopper Almon, 2000. "Product-to-Product Tables via Product-Technology with No Negative Flows," Economic Systems Research, Taylor & Francis Journals, vol. 12(1), pages 27-43.
    10. Steenge, Albert E., 1990. "The commodity technology revisited : Theoretical basis and an application to error location in the make-use framework," Economic Modelling, Elsevier, vol. 7(4), pages 376-387, October.
    11. Joe Mattey, 1993. "Evidence on IO Technology Assumptions From the Longitudinal Research Database," Working Papers 93-8, Center for Economic Studies, U.S. Census Bureau.
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    More about this item

    Keywords

    Input–output analysis; Technical coefficients; Use and make tables; Input–output modeling;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D - Microeconomics

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