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How to Estimate Unbiased and Consistent input-output Multipliers on the Basis of use and Make Matrices

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Author Info
Thijs ten Raa () (Tilburg University)
José Manuel Rueda Cantuche () (Universidad Pablo de Olavide)

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Abstract

In the literature, the construction of technical coefficients is linked to flow data (use and make matrices), but stochastics are imposed on the coefficients when multipliers are calculated, by means of the Leontief inverse. Due the nonlinearity of this operation, the multiplier estimates are biased (it is generally argued that the Leontief inverse underestimates input-output multipliers). By going back to the flow data, this paper provides unbiased and consistent employment and output multipliers estimates for the Andalusian economy. Rectangular use and make matrices are accommodated and technical coefficients, the Leontief inverse, and associated problems (such as negative coefficients) are circumvented.

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Publisher Info
Paper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2004/14.

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Length: 38 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:cea:doctra:e2004_14

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Related research
Keywords: Stochastic input-output analysis; employment multipliers; output multipliers; use and make matrices.;

Find related papers by JEL classification:
C67 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Input-Output Models
D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation

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  1. Thijs ten Raa & José M. Rueda-Cantuche, 2005. "The problem of negatives in input-output analysis: a review of the solutions," Economic Working Papers at Centro de Estudios Andaluces E2005/07, Centro de Estudios Andaluces. [Downloadable!]
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