Input-output Model - Measuring Input-output Tables

Measuring Input-output Tables

The mathematics of input-output economics is straightforward, but the data requirements are enormous because the expenditures and revenues of each branch of economic activity have to be represented. As a result, not all countries collect the required data and data quality varies, even though a set of standards for the data's collection has been set out by the United Nations through its System of National Accounts (SNA): the most recent standard is the 2008 SNA. Because the data collection and preparation process for the input-output accounts is necessarily labor and computer intensive, input-output tables are often published long after the year in which the data were collected--typically as much as 5-7 years after. Moreover, the economic "snapshot" that the benchmark version of the tables provides of the economy's cross-section is typically taken only once every few years, at best.

However, many developed countries estimate input-output accounts annually and with much greater recency. This is because while most uses of the input-output analysis focus on the matrix set of interindustry exchanges, the actual focus of the analysis from the perspective of most national statistical agencies is the benchmarking of gross domestic product. Input-output tables therefore are an instrumental part of national accounts. As suggested above, the core input-output table reports only intermediate goods and services that are exchanged among industries. But an array of row vectors, typically aligned below this matrix, record non-industrial inputs by industry like payments for labor; indirect business taxes; dividends, interest, and rents; capital consumption allowances (depreciation); other property-type income (like profits); and purchases from foreign suppliers (imports). At a national level, although excluding the imports, when summed this is called "gross product originating" or "gross domestic product by industry." Another array of column vectors is called "final demand" or "gross product product consumed." This displays columns of spending by households, governments, changes in industry stocks, and industries on investment, as well as net exports. (See also Gross domestic product.) In any case, by employing the results of an economic census which asks for the sales, payrolls, and material/equipment/service input of each establishment, statistical agencies back into estimates of industry-level profits and investments using the input-output matrix as a sort of double-accounting framework.