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Notes On Some Common Misconceptions In Input-Output Impact Methodology

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Abstract

The methodology in many studies involving input-output analysis appears to be often misunderstood, particularly in the way multipliers are used. The preoccupation with multipliers has led in many cases to incorrect analytical procedures; for example, there is a temptation to first derive a multiplier and then use this multiplier to calculate the total impact on the economy. This paper demonstrates that this approach is often erroneous and can result in significant errors. In addition, the importance of determining how imports are treated when using input-output in empirical situations is discussed. This is particularly relevant when using input-output tables in developing countries. Other issues which are clarified include the use of output multipliers, state versus regional multipliers and impacts, expenditure switching and table balancing.

Suggested Citation

  • Assoc. Prof. Guy R. West, 1999. "Notes On Some Common Misconceptions In Input-Output Impact Methodology," Discussion Papers Series 262, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:262
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    File URL: https://espace.library.uq.edu.au/view/UQ:11078/DP262Oct99.pdf
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    2. Khalid A. Hamid & Zakariah A. Rashid & R. Zarina R. Mohammad, . "Effect of Energy Price Increase on East Asian Region’s Food Industries’ Interconnectedness and Integration," Chapters,, Economic Research Institute for ASEAN and East Asia (ERIA).
    3. Gunnar Lindberg, 2011. "On the appropriate use of (input-output) coefficients to generate non-survey regional input-output tables: Implications for the determination of output multipliers," ERSA conference papers ersa10p800, European Regional Science Association.
    4. Maureen Kilkenny & Mark D. Partridge, 2009. "Export Sectors and Rural Development," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 910-929.

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