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Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables

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  • Kristinn, Hermannsson

Abstract

It is a well-established fact in the literature on simulating Input-Output tables that mechanical methods for estimating intermediate trade lead to biased results where cross-hauling is underestimated and Type-I multipliers are overstated. Repeated findings to this effect have led to a primary emphasis on advocating the accurate estimation of intermediate trade flows. This paper reviews previous research and argues for a qualification of the consensus view: When simulating IO tables, construction approaches need to consider spill-over effects driven by wage and consumption flows. In particular, for the case of metropolitan economies, wage and consumption flows are important if accurate Type-II multipliers are to be obtained. This is demonstrated by constructing an interregional Input-Output table, which captures interdependencies between a city and its commuter belt, nested within the wider regional economy. In addition to identifying interdependencies caused by interregional intermediate purchases, data on subregional household incomes and commuter flows are used to identify interdependencies from wage payments and household consumption. The construction of the table is varied around a range of assumptions on intermediate trade and household consumption to capture the sensitivity of multipliers.

Suggested Citation

  • Kristinn, Hermannsson, 2013. "Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables," SIRE Discussion Papers 2013-37, Scottish Institute for Research in Economics (SIRE).
    • Handle: RePEc:edn:sirdps:451
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    Cited by:

    1. Hermannsson, Kristinn & McIntyre, Stuart G., 2014. "Local consumption and territorial based accounting for CO2 emissions," Ecological Economics, Elsevier, vol. 104(C), pages 1-11.
    2. Philippe Poinsot & Jean-François Ruault, 2019. "Economic-base theory and highly-open economies: incorporating day-to- day mobility," Working Papers hal-02269336, HAL.
    3. José Daniel Buendía Azorín & Rubén Martínez Alpañez & Maria del Mar Sánchez de la Vega, 2022. "A new proposal to model regional input–output structures using location quotients. An application to Korean and Spanish regions," Papers in Regional Science, Wiley Blackwell, vol. 101(5), pages 1219-1237, October.
    4. Oriane Lafuente-Sampietro, 2021. "The multiplier effect of convertible local currencies : case study on two French schemes," Working Papers halshs-03324625, HAL.
    5. Tony Flegg & Leonardo J. Mastronardi & Carlos A. Romero, 2015. "Evaluating the FLQ and AFLQ formulae for estimating regional input coefficients: empirical evidence for the province of C¨®rdoba, Argentina," Working Papers 20151508, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    6. Anthony T. Flegg & Guiseppe R. Lamonica & Francesco M. Chelli & Maria C. Recchioni & Timo Tohmo, 2021. "A new approach to modelling the input–output structure of regional economies using non-survey methods," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-31, December.
    7. Matthew S. Lyons, 2023. "The economic impact of COVID-19 on the creative industries: a sub-regional input–output approach," Letters in Spatial and Resource Sciences, Springer, vol. 16(1), pages 1-12, December.

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    More about this item

    Keywords

    Input-Outpu; Location Quotients; Commuting; Consumption; Glasgow; Scotland;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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