Merging the Hypothetical Extraction Method and the Classical Multiplier Approach: A Hybrid Possibility for Identifying Key Distributive Sectors

The two main alternative methods used to identify key sectors within the input- output approach, the Classical Multiplier method (CMM) and the Hypothetical Extraction method (HEM), are formally and empirically compared in this paper. Our findings indicate that the main distinction between the two approaches stems from the role of the internal effects. These internal effects are quantified under the CMM while under the HEM only external impacts are considered. In our comparison, we find, however that CMM backward measures are more influenced by within-block effects than the proposed forward indices under this approach. The conclusions of this comparison allow us to develop a hybrid proposal that combines these two existing approaches. This hybrid model has the advantage of making it possible to distinguish and disaggregate external effects from those that a purely internal. This proposal has also an additional interest in terms of policy implications. Indeed, the hybrid approach may provide useful information for the design of ''second best'' stimulus policies that aim at a more balanced perspective between overall economy-wide impacts and their sectoral distribution.Sectoral linkages, Key sectors, Extraction methods, Multiplier methods.

Cost Efficiency in the Swiss Gas Distribution Sector

This paper studies the cost structure of gas distribution utilities in Switzerland. Three stochastic frontier models are applied to a panel of 26 companies operating from 1996 to 2000. Efficiency is assumed to be constant over time. The analysis highlights the importance of output characteristics such as customer density and network size. The results suggest that the utilities could slightly reduce their operating costs by improving efficiency. There is no evidence of significant unexploited scale economies. However, our analysis indicates that the estimates of scale economies could be sensitive to the assumptions regarding the variation of output with output characteristics.cost efficiency; scale economies, gas distribution, stochastic frontier analysis

Assessing carbon dioxide emission reduction potentials of improved manufacturing processes using multiregional input output frameworks

Evaluating innovative process technologies has become highly important within the last decades. As standard tools different Life Cycle Assessment methods have been established, which are continuously improved. While those are designed for evaluating single processes they run into difficulties when it comes to assessing environmental impacts of process innovations at macroeconomic level. In this paper we develop a multi-step evaluation framework building on multi regional input–output data that allows estimating macroeconomic impacts of new process technologies, considering the network characteristics of the global economy. Our procedure is as follows: i) we measure differences in material usage of process alternatives, ii) we identify where the standard processes are located within economic networks and virtually replace those by innovative process technologies, iii) we account for changes within economic systems and evaluate impacts on emissions. Within this paper we exemplarily apply the methodology to two recently developed innovative technologies: longitudinal large diameter steel pipe welding and turning of high-temperature resistant materials. While we find the macroeconomic impacts of very specific process innovations to be small, its conclusions can significantly differ from traditional process based approaches. Furthermore, information gained from the methodology provides relevant additional insights for decision makers extending the picture gained from traditional process life cycle assessment.DFG, SFB 1026, Sustainable Manufacturing - Globale Wertschöpfung nachhaltig gestalte

Biproportional Techniques in Input-Output Analysis: Table Updating and Structural Analysis

This paper is dedicated to the contributions of Sir Richard Stone, Michael Bacharach, and Philip Israilevich. It starts out with a brief history of biproportional techniques and related matrix balancing algorithms. We then discuss the RAS algorithm developed by Sir Richard Stone and others. We follow that by evaluating the interpretability of the product of the adjustment parameters, generally known as R and S. We then move on to discuss the various formal formulations of other biproportional approaches and discuss what defines an algorithm as “biproportionalâ€. After mentioning a number of competing optimization algorithms that cannot fall under the rubric of being biproportional, we reflect upon how some of their features have been included into the biproportional setting (the ability to fix the value of interior cells of the matrix being adjusted and of incorporating data reliability into the algorithm). We wind up the paper by pointing out some areas that could use further investigation.Input-Output Economics; RAS; data raking; iterative proportional fitting; estimating missing data

FUNDAMENTAL ECONOMIC STRUCTURE AND STRUCTURAL CHANGE IN REGIONAL ECONOMIES: A METHODOLOGICAL APPROACH

Regional economic structure is defined as the composition and patterns of various components of the regional economy such as: produc-tion, employment, consumption, trade, and gross regional product. Structur-al change is conceptualized as the change in relative importance of the aggregate indicators of the economy. The process of regional development and structural change are intertwined, implying as economic development takes place the strength and direction of intersectoral relationships change leading to shifts in the importance, direction and interaction of economic sectors such as: primary, secondary, tertiary, quaternary and quinary sec-tors. The fundamental economic structure (FES) concept implies that selected characteristics of an economy will vary predictably with region size. The identification of FES leads to an improved understanding of the space-time evolution of regional economic activities at different geograph-ical scales. The FES based economic activities are predictable, stable and important. This paper reviews selected themes in manifesting an improved understanding of the relationship among intersectoral transactions and economic size leading to the identification of FES. The following four ques-tions are addressed in this paper: (1) What are the relationships among sector composition and structural change in the process of economic devel-opment? (2) What are the approaches utilized to study structural change analysis? (3) Can a methodology be developed to identify FES for regional economies? (4) Would the identification of FES manifest an improved con-ception of the taxonomy of economies?STRUCTURAL CHANGE AND FUNDAMENTAL ECONOMIC STRUCTURE

The evaluation of national accounting matrices with environmental accounts (NAMEA) as a methodology for carrying out a sustainability assessment of the Scottish food and drink sector

This report introduces environmental input-output (IO) accounts for Scotland as an example of a NAMEA framework. It provides an introduction to the use of basic IO multiplier methodology, which can be applied to examine pollution/waste generation and/or resource use under production and consumption accounting principles

“Policy scepticism” and the impact of Scottish Higher Education Institutions (HEIs) on their host region: accounting for regional budget constraints under devolution

A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. Its denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the public-sector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity

‘Policy scepticism’ and the impact of Scottish higher education institutions (HEIs) on their host region : accounting for regional budget constraints under devolution

A “policy scepticism” has emerged that challenges the results of conventional regional HEI impact analyses. Its denial of the importance of the expenditure impacts of HEIs appears to be based on a belief in either a binding regional resource constraint or a regional public sector budget constraint. In this paper we provide a systematic critique of this policy scepticism. However, while rejecting the extreme form of policy scepticism, we argue that it is crucial to recognise the importance of the public-sector expenditure constraints that are binding under devolution. We show how conventional impact analyses can be augmented to accommodate regional public sector budget constraints. While our results suggest that conventional impact studies overestimate the expenditure impacts of HEIs, they also demonstrate that the policy scepticism that treats these expenditure effects as irrelevant neglects some key aspects of HEIs, in particular their export intensity

The WITCH Model. Structure, Baseline, Solutions

WITCH – World Induced Technical Change Hybrid – is a regionally disaggregated hard-link hybrid global model with a neoclassical optimal growth structure (top-down) and a detailed energy input component (bottom-up). The model endogenously accounts for technological change, both through learning curves that affect the prices of new vintages of capital and through R&D investments. The model features the main economic and environmental policies in each world region as the outcome of a dynamic game. WITCH belongs to the class of Integrated Assessment Models as it possesses a climate module that feeds climate changes back into the economy. Although the model’s main features are discussed elsewhere (Bosetti et al., 2006), here we provide a more thorough discussion of the model’s structure and baseline projections, to describe the model in greater detail. We report detailed information on the evolution of energy demand, technology and CO2 emissions. We also explain the procedure used to calibrate the model parameters. This report is therefore meant to provide effective support to those who intending to use the WITCH model or interpret its results.Climate Policy, Hybrid Modelling, Integrated Assessment, Technological Change