Comparative stability analysis of demand-side and supply-side input-output models: the case of Japan, 1960-90

Ranko Bon and Tomonari Yashiro

Applied Economics Letters, 1996, vol. 3, issue 5, 349-354

Abstract: The results of comparative stability analysis of demand- and supply-side input-output models using the Japanese data are presented, together with the results of the comparison between the comparative stability analysis of the two models using the Japanese, UK and US data. The results of comparative stability analysis of the two models using the US data were reported elsewhere (Bon, 1986), and the results of the analysisusing the UK data were presented in this journal (Bon and Xu Bing, 1993). The forecasts of sectoral and total output of the two models are generated with known final demand and value added figures from subsequent tables, and are compared with known output figures for benchmark years. The results of the three studies are similar in part. The demand-side model performs somewhat better in terms of total output forecasts, but the supply-side performs somewhat better for a larger number of sectors. Also, in all three countries the supply-side model provides markedly superior forecasts for 'mature' sectors, such as agriculture and mining. However, there are some notable differences between Japan, on the one hand, and the UK and USA, on the other. In particular, the construction sector's performance is predicted better by the demand-side model in Japan, whereas the supply-side model produces better construction forecasts in the case of the UK and USA. Some other differences regarding several other sectors may be due to different aggregation scheme. Both models should be used to determine the extent to which an economy or a sector are demand- or supply-driven.

Date: 1996
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DOI: 10.1080/135048596356492

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