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Notes On Some Common Misconceptions In Input-Output Impact Methodology

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    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.

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    Paper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number 262.

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    Date of creation: Oct 1999
    Handle: RePEc:qld:uq2004:262
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    1. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, October.
    2. P W J Batey & M Madden, 1981. "Demographic-Economic Forecasting within an Activity-Commodity Framework: Some Theoretical Considerations and Empirical Results," Environment and Planning A, , vol. 13(9), pages 1067-1083, September.
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