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Revised stochastic analysis of an input-output model

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  • Raa, Thijs ten
  • Steel, Mark F.J.

Abstract

A main difficulty of regional analysis is the inaccuracy of regional input-output data. A natural framework for investigation is stochastic input-output analysis. In his study of Central Queensland, West (1986) assumes that input coefficients are normally distributed and derives formulas for the approximation of input-output multipliers means and variances. In his normality framework, these moments do not exits, however. Moreover, an inconsistency in the derivation will be exposed. We remedy these shortcomings by respecification of the stochastic structure and by direct evaluation of the moments through Monte Carlo calculations. West's formulas are quite accurate for an aggregated version of his data set. The leading terms of the formulas can be shown to be first order approximations to the means and the variances.

Suggested Citation

  • Raa, Thijs ten & Steel, Mark F.J., 1992. "Revised stochastic analysis of an input-output model," UC3M Working papers. Economics 2836, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:2836
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    References listed on IDEAS

    as
    1. West, Guy R, 1986. "A Stochastic Analysis of an Input-Output Model," Econometrica, Econometric Society, vol. 54(2), pages 363-374, March.
    2. Simonovits, A, 1975. "A Note on the Underestimation and Overestimation of the Leontief Inverse," Econometrica, Econometric Society, vol. 43(3), pages 493-498, May.
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    Cited by:

    1. Malcolm Beynon & Max Munday & Annette Roberts, 2005. "Ranking sectors using fuzzy output multipliers," Economic Systems Research, Taylor & Francis Journals, vol. 17(3), pages 237-253.
    2. Malawski, A., 1991. "Some properties of semidynamical exchange system," Other publications TiSEM 494c0560-5efe-4139-ad4b-a, Tilburg University, School of Economics and Management.
    3. Manfred Lenzen, 2001. "A Generalized Input-Output Multiplier Calculus for Australia," Economic Systems Research, Taylor & Francis Journals, vol. 13(1), pages 65-92.
    4. Thijs ten Raa & Pieter Kop Jansen, 1998. "Bias and Sensitivity of Multipliers," Economic Systems Research, Taylor & Francis Journals, vol. 10(3), pages 275-284.
    5. Umed Temurshoev, 2015. "Uncertainty treatment in input-output analysis," Working Papers 2015-004, Universidad Loyola Andalucía, Department of Economics.
    6. C. Oliveira & D. Coelho & C. H. Antunes, 2016. "Coupling input–output analysis with multiobjective linear programming models for the study of economy–energy–environment–social (E3S) trade-offs: a review," Annals of Operations Research, Springer, vol. 247(2), pages 471-502, December.
    7. Seung, Chang K. & Kim, Do-Hoon & Yi, Ju-Hyun & Song, Se-Hyun, 2021. "Accounting for price responses in economic evaluation of climate impacts for a fishery," Ecological Economics, Elsevier, vol. 181(C).

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    Keywords

    Leontief inverse;

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