Estimation Errors in Input-Output Tables and Prediction Errors in Computable General Equilibrium Analysis

Nobuhiro Hosoe

No 13-19, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: We used 1995-2000-2005 linked input-output (IO) tables for Japan to examine estimation errors of updated IO tables and the resulting prediction errors in computable general equilibrium (CGE) analysis developed with updated IO tables. As we usually have no true IO tables for the target year and therefore need to estimate them, we cannot evaluate estimation errors of updated IO tables without comparing the updated ones with true ones. However, using the linked IO tables covering three different years enables us to make this comparison. Our experiments showed that IO tables estimated with more detailed and recent data contained smaller estimation errors and led to smaller quantitative prediction errors in CGE analysis. Despite the quantitative prediction errors, prediction was found to be qualitatively correct. As for the performance of updating techniques of IO tables, a cross-entropy method often outperformed a least-squares method in IO estimation with only aggregate data for the target year but did not necessarily outperform the least-squares method in CGE prediction.

Pages: 24 pages
Date: 2013-10
New Economics Papers: this item is included in nep-cmp and nep-for
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Estimation errors in input–output tables and prediction errors in computable general equilibrium analysis (2014)
Working Paper: Estimation Errors in Input-Output Tables and Prediction Errors in Computable General Equilibrium Analysis (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ngi:dpaper:13-19

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