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Output and Employment Input-Output Multipliers on the basis of Use and Make Matrices

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  • Thijs Ten Raa
  • José Manuel Rueda-Cantuche

Abstract

In the literature, the construction of technical coefficients is linked to flow data (use and make matrices), but stochastics are imposed on the coefficients when multipliers are calculated, by means of the Leontief inverse. Due the nonlinearity of this operation, the multiplier estimates are biased (it is generally argued that the Leontief inverse underestimates input-output multipliers). By going back to the flow data, this paper provides unbiased and consistent employment and output multipliers input-output estimates for the Andalusian economy. Rectangular use and make matrices are accommodated and technical coefficients, the Leontief inverse, and associated problems (such as negative coefficients) are circumvented.

Suggested Citation

  • Thijs Ten Raa & José Manuel Rueda-Cantuche, 2005. "Output and Employment Input-Output Multipliers on the basis of Use and Make Matrices," ERSA conference papers ersa05p282, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa05p282
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    References listed on IDEAS

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    1. Pieter Kop Jansen & Thijs ten Raa, 2009. "The Choice of Model in the Construction of Input–Output Coefficients Matrices," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 4, pages 47-66, World Scientific Publishing Co. Pte. Ltd..
    2. Joe Mattey & Thijs ten Raa, 2009. "Primary Versus Secondary Production Techniques in U.S. Manufacturing," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 16, pages 285-305, World Scientific Publishing Co. Pte. Ltd..
    3. Joe Mattey & Thijs ten Raa, 2009. "Primary Versus Secondary Production Techniques in U.S. Manufacturing," World Scientific Book Chapters,in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 16, pages 285-305 World Scientific Publishing Co. Pte. Ltd..
    4. J. Harvey Edmonston, 1952. "A Treatment of Multiple-Process Industries," The Quarterly Journal of Economics, Oxford University Press, vol. 66(4), pages 557-571.
    5. Simonovits, A, 1975. "A Note on the Underestimation and Overestimation of the Leontief Inverse," Econometrica, Econometric Society, vol. 43(3), pages 493-498, May.
    6. Viet, Vu Quang, 1994. "Practices in input-output table compilation," Regional Science and Urban Economics, Elsevier, vol. 24(1), pages 27-54, February.
    7. Roland-Holst, David W, 1989. "Bias and Stability of Multiplier Estimates," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 718-721, November.
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