Comparing the aggregation bias in the input–output model and the social accounting matrix model

Abstract

In economic literature, some information deficiencies and computational complexities have traditionally been solved through the aggregation of data. In input–output (IO) modelling, researchers have been interested in aggregation since the 1950s. Extending the conventional IO aggregation approach to the social accounting matrix (SAM) framework may help to identify the effects caused by the problems of information that usually appear in the linear SAM models. This article applies the theory of IO aggregation to the SAM model and presents a comparison of the IO aggregation bias and the SAM aggregation bias.

Keywords:

• linear aggregation
• linear SAM model
• IO model
• aggregation bias

JEL Classification:

• C67
• C69
• D67
• D69

Funding

We acknowledge the Ministerio de Educación y Cultura of Spain [grant number ECO2010-17728, ECO2009-06953] and the Generalitat de Catalunya [grant number 2009SGR-322, 2009SGR-1051].

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Notes

¹ See Hatanaka (1952), Theil (1957), Fisher (1958), Ara (1959), Ijiri (1971) and Kimura (1985), among others. Kymn (1990) reviewed the theory of aggregation developed since then. Olsen (1993) presented a joint aggregation theory in IO quantity-oriented and price-oriented models. Dietzenbacher and Hoen (1999) analysed the aggregation in an IO table estimated by means of double deflation and Olsen (2001) extended the results for perfect aggregation in IO price and quantity models. Miller and Blair (2009) summarize the IO aggregation theory.

² Note that when c = 0, then , ,  = I and  = I. In this case, the income relations defined by the IO model coincide with the ones defined by the SAM model.