Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables

Kristinn Hermannsson

No 1305, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: 1 Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables Dr Kristinn Hermannsson, Fraser of Allander Institute, Department of Economics, University of Strathclyde kristinn.hermannsson@strath.ac.uk Abstract It is a well-established fact in the literature on simulating Input-Output tables that mechanical methods for estimating intermediate trade lead to biased results where cross-hauling is underestimated and Type-I multipliers are overstated. Repeated findings to this effect have led to a primary emphasis on advocating the accurate estimation of intermediate trade flows. This paper reviews previous research and argues for a qualification of the consensus view: When simulating IO tables, construction approaches need to consider spill-over effects driven by wage and consumption flows. In particular, for the case of metropolitan economies, wage and consumption flows are important if accurate Type-II multipliers are to be obtained. This is demonstrated by constructing an interregional Input-Output table, which captures interdependencies between a city and its commuter belt, nested within the wider regional economy. In addition to identifying interdependencies caused by interregional intermediate purchases, data on subregional household incomes and commuter flows are used to identify interdependencies from wage payments and household consumption. The construction of the table is varied around a range of assumptions on intermediate trade and household consumption to capture the sensitivity of multipliers.

Keywords: Input-Output; Location Quotients; Commuting; Consumption; Glasgow; Scotland. (search for similar items in EconPapers)
JEL-codes: C67 R12 R15 R23 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2013-05
New Economics Papers: this item is included in nep-hme and nep-ure
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input–Output Tables (2016)
Working Paper: Beyond Intermediates: The Role of Consumption and Commuting in the Construction of Local Input-Output Tables (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:str:wpaper:1305

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