Merging the Hypothetical Extraction Method and the Classical Multiplier Approach: A Hybrid Possibility for Identifying Key Distributive Sectors
AbstractThe two main alternative methods used to identify key sectors within the input- output approach, the Classical Multiplier method (CMM) and the Hypothetical Extraction method (HEM), are formally and empirically compared in this paper. Our findings indicate that the main distinction between the two approaches stems from the role of the internal effects. These internal effects are quantified under the CMM while under the HEM only external impacts are considered. In our comparison, we find, however that CMM backward measures are more influenced by within-block effects than the proposed forward indices under this approach. The conclusions of this comparison allow us to develop a hybrid proposal that combines these two existing approaches. This hybrid model has the advantage of making it possible to distinguish and disaggregate external effects from those that a purely internal. This proposal has also an additional interest in terms of policy implications. Indeed, the hybrid approach may provide useful information for the design of ''second best'' stimulus policies that aim at a more balanced perspective between overall economy-wide impacts and their sectoral distribution.
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 886.11.
Date of creation: 14 Oct 2011
Date of revision:
Sectoral linkages; Key sectors; Extraction methods; Multiplier methods.;
Find related papers by JEL classification:
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-14 (All new papers)
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