A supply-use approach to capital endogenization in input–output analysis

Carl-Johan H. Södersten and Manfred Lenzen

Economic Systems Research, 2020, vol. 32, issue 4, 451-475

Abstract: Input–output analysis currently treats capital investment as exogenous to the inter-industry system despite capital goods being used further in production processes. Previous studies have applied the Leontief calculus to include impacts of capital in footprint calculations. Here, we adopt a supply-use approach to incorporating capital into footprint calculations, by constructing capital supply-use tables (KSUTs) that enable differentiating capital goods. As the new KSUT formalism is compliant with the Supply-Use formalism in the UN's System of National Accounts, we can keep full transparency throughout the process of calculating impact multipliers. We demonstrate the usefulness of the KSUT framework in a case study of the Australian economy, with environmental extensions from the EXIOBASE3 database. If consumption-based emissions were considered for the UN's Framework Convention on Climate Change, the KSUT framework would provide a consistent and transparent foundation for working out countries’ responsibility for carbon emissions from both current use and capital investment.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://hdl.handle.net/10.1080/09535314.2020.1784852 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ecsysr:v:32:y:2020:i:4:p:451-475

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CESR20

DOI: 10.1080/09535314.2020.1784852

Access Statistics for this article

Economic Systems Research is currently edited by Bart Los and Manfred Lenzen

More articles in Economic Systems Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().