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The Problem of Negatives Generated by the Commodity Technology Model in Input-Output Analysis: A Review of the Solutions

In: Efficiency and Input-Output Analyses Theory and Applications

Author

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  • Thijs ten Raa
  • José M. Rueda-Cantuche

Abstract

Many economic models (e.g. computable general equilibrium models, econometric input-output models) revolve around a matrix of technical coefficients. However, these matrices can be estimated only once every 5 years as long as they are calculated from input-output tables and these are only published on a 5-year basis. Alternatively, use and make (or supply) tables are being regularly published on a yearly basis. However, they need to be converted into input-output tables as a previous step to form the matrix of technical coefficients. In doing so, this paper aims to shed light on the construction process of input-output tables and to guide economic modelers in making a decision on the way to make such conversion and how to deal with the subsequent problems, particularly with negative technical coefficients.

Suggested Citation

  • Thijs ten Raa & José M. Rueda-Cantuche, 2021. "The Problem of Negatives Generated by the Commodity Technology Model in Input-Output Analysis: A Review of the Solutions," World Scientific Book Chapters, in: Efficiency and Input-Output Analyses Theory and Applications, chapter 18, pages 319-338, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811233296_0018
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    2. Valeria Ferreira & Laia Pié & Antonio Terceño, 2020. "The Role of the Foreign Sector in the Spanish Bioeconomy: Two Approaches Based on SAM Linear Models," IJERPH, MDPI, vol. 17(24), pages 1-25, December.
    3. Maria Teresa Alvarez-Martinez & Montserrat Lopez-Cobo, 2016. "Social Accounting Matrices for the EU-27 in 2010. Building a new database for RHOMOLO," JRC Research Reports JRC101673, Joint Research Centre.
    4. Schwärzler, Marion Cornelia & Kronenberg, Tobias, 2016. "Methodology of the National Health Account for Germany - Database, compilation and results," MPRA Paper 73561, University Library of Munich, Germany.

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    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D - Microeconomics

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