Updating and Estimating a Social Accounting Matrix Using Cross Entropy Methods
The problem in estimating a social accounting matrix (SAM) for a recent year is to find an efficient and cost-effective way to incorporate and reconcile information from a variety of sources, including data from prior years. Based on information theory, the paper presents a flexible 'cross entropy' (CE) approach to estimating a consistent SAM starting from inconsistent data estimated with error, a common experience in many countries. The method represents an efficient information processing rule-using only and all information available. It allows incorporating errors in variables, inequality constraints, and prior knowledge about any part of the SAM. An example is presented, applying the CE approach to data from Mozambique, using a Monte Carlo approach to compare the CE approach to the standard RAS method and to evaluate the gains in precision from utilizing additional information.
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Volume (Year): 13 (2001)
Issue (Month): 1 ()
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References listed on IDEAS
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- Mun-Heng Toh, 1998. "The RAS Approach in Updating Input-Output Matrices: An Instrumental Variable Interpretation and Analysis of Structural Change," Economic Systems Research, Taylor & Francis Journals, vol. 10(1), pages 63-78.
- Golan, Amos & Judge, George & Robinson, Sherman, 1994. "Recovering Information from Incomplete or Partial Multisectoral Economic Data," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 541-549, August.
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- McDougall, Robert, 1999. "Entropy Theory and RAS are Friends," GTAP Working Papers 300, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- F Harrigan & I McNicoll, 1986. "Data Use and the Simulation of Regional Input-Output Matrices," Environment and Planning A, , vol. 18(8), pages 1061-1076, August.
- John Freebairn & Bill Griffiths, 2006. "Introduction," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages 1-1, 09.
- Zellner, A., 1988. "Optimal Information-Processing And Bayes' Theorem," Papers m8803, Southern California - Department of Economics.
- F Harrigan & I McNicoll, 1986. "Data use and the simulation of regional input - output matrices," Environment and Planning A, Pion Ltd, London, vol. 18(8), pages 1061-1076, August.
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