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Restatement of the I-O Coefficient Stability Problem

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  • Dobrescu, Emilian

    ()
    (Centre for Macroeconomic Modelling, NIER, Romanian Academy)

Abstract

The capacity of input-output tables to reflect the structural peculiarities of an economy and to forecast, on this basis, its evolution, depends essentially on the characteristics of the matrix A—matrix of I-O (or technical) coefficients. However, the temporal behaviour of these coefficients is yet an open question. In most applications, the stability of matrix A is usually admitted. This is a reasonable assumption only for a short-medium term. In the case of longer intervals, the question is much more complicated. We shall empirically discuss this problem by using Romanian input-output tables. Our statistical option was motivated inter alia by the existence of official annual data for two decades (1989–2009). As an introduction, Sect. 1 characterises the general framework of paper. Section 2—The main characteristics of I-O coefficients as statistical time series—examines the variability of technical coefficients expressed in both volume and value terms. The analysis is convergent to other previous works, confirming that the evolution of these coefficients in real and nominal terms is roughly similar. The main finding of this section is that, on one hand, the I-O coefficients are volatile, but on the other, they are serially correlated. Consequently, Sect. 3—Attractor hypothesis—examines a possible presence of attractors in corresponding statistical series. The paper describes a methodology to approximate these using new indicators obtained by summation—in columns and rows—of the technical coefficients (colsums scaj and rowsums srai). The RAS method is involved as a connecting technique between these indicators and sectoral data. Section 4—Conclusions—presents the main conclusions of the research and outlines several possible future developments. The database and econometric analysis are presented in Statistical and Econometric Appendix.

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Bibliographic Info

Paper provided by Institute for Economic Forecasting in its series Working Papers of Macroeconomic Modelling Seminar with number 132601.

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Length: 67 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:rjr:wpmems:132601

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Keywords: I-O coefficients; Volatility; Serial correlation; Attractor; RAS technique;

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References

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  1. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
  2. Dobrescu, Emilian, 2009. "Measuring the Interaction of Structural Changes with Inflation," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(5), pages 5-99.
  3. Don Harding & Adrian Pagan, 1999. "Dissecting the Cycle," Melbourne Institute Working Paper Series wp1999n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  4. António Afonso & Davide Furceri, 2007. "Business Cycle Synchronization and Insurance Mechanisms in the EU," Working Papers Department of Economics 2007/26, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  5. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
  6. Linden, Jan A. van der & Dietzenbacher, Erik, 1995. "The determinants of structural change in the European Union : a new application of RAS," Research Report 95D36, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  7. Dobrescu, Emilian, 2006. "Integration of macroeconomic behavioural relationships and the input-output block: Romanian modelling experience," MPRA Paper 35748, University Library of Munich, Germany.
  8. Michael Lahr & Louis de Mesnard, 2004. "Biproportional Techniques in Input-Output Analysis: Table Updating and Structural Analysis," Economic Systems Research, Taylor & Francis Journals, vol. 16(2), pages 115-134.
  9. Dobrescu, Emilian & Gaftea, Viorel & Scutaru, Cornelia, 2010. "Using the Leontief Matrix to Estimate the Impact of Investments upon the Global Output," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 176-187, July.
  10. Emilian Dobrescu & Viorel Gaftea, 2012. "On the Accuracy of RAS Method in an Emergent Economy," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(32), pages 502-521, June.
  11. Randall Jackson & Alan Murray, 2004. "Alternative Input-Output Matrix Updating Formulations," Economic Systems Research, Taylor & Francis Journals, vol. 16(2), pages 135-148.
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Cited by:
  1. Stefanescu, Stefan, 2013. "Discovering the System Structure with Applications in Economic and Social Sciences," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 129-140, June.
  2. Agapie, Adriana & Lima, Tony, 2013. "Cost Minimization under Variable Input Prices: A Theoretical Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 70-86, June.

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