An Empirical Evaluation of Methods to Estimate Use Tables with Imports Only

Bart Los

University of Groningen

(WIOD Conference, Vienna, 26-28 May 2010)

This project is funded by the European Commission, Research Directorate General as part of the 7th Framework Programme, Theme 8: Socio-Economic Sciences and Humanities.

Grant Agreement no: 225 281

Structure of national supply and use table for country

Exports

C I G

Other countries

Notes: total use = total supplyC: deliveries for household consumptionI: deliveries for investment purposesG: deliveries for government consumption

Total Use

country A Exports

Intermediate useDomestic final

useSupply

product industry

country A

indu

stry

prod

uct Intermediate use

(incl. imported inputs)

Domestic supply

Imports

Total useDomestic final

use

Total supplyGross value added

Gross output

Structure of inter-country supply and use table for country A

C I Gcountry

Bcountry

C

Notes:Column sums of the matrix with domestic supply equal the vector with total use of domestic outputColumn sums of the matrix with imports from B (or C) equal the vector with total use of imports from B (resp. C)

country C

indu

stry

Imports from C

country B

indu

stry

Imports from B

Re-exports

country AExports

to BExports

to C

country A

indu

stry

Domestic supply

Re-exports

Domestic final use of imports

from B

Domestic final use of imports

from C

prod

uct

prod

uct

country B

country C

industry

prod

uct

Intermediate use of domestic output

Total use of domestic

output

Domestic final use of domestic

output

Total Use

Supply

product

Exports toIntermediate useDomestic final

use

Total supplyGross value added

-

Total use of imports

from B

Total use of imports

from C

Intermediate use of imports from B

Intermediate use of imports from C

-

Gross output

Step 1: Distinction between use of domestic inputs and imported inputs

Step 2: Attribution of use of imported inputs to country of origin

row

row

Availability of Imports Data

Country Column SIOT Use Benchmarks Country Column SIOT Use BenchmarksAustralia X 1998, 2001, 2004 Italy X 1995, 2000, 2005Austria X X 1995, 2000, 2005 JapanBelgium X 1995, 2000 Latvia X 1996, 1998Brazil X ? Luxembourg X n.a.Bulgaria X n.a. Malta X n.a.Canada Mexico X n.a.China X n.a. Netherlands X 1995-2002, 2004-2006Cyprus X n.a. Poland X 2005Czech Rep. X 2005 Portugal X 1995, 1999, 2005Denmark X 2001-2005 Romania X 2000, 2003-2006Estonia X 1997, 2001, 2005 RussiaFinland X X 1995-2005 Slovakia X 2000, 2005France X 1995, 1997,1999-2005 Slovenia X 1996, 2000-2001, 2005FY Macedonia X 2005 South Korea X 1995, 2000, 2003, 2005Germany X X 1995, 2000-2006 Spain X X 1995, 2000, 2005Greece X 2000, 2005 Sweden X 1995, 2000, 2005Hungary X 2000 Taiwan X 2001, 1996, 2004India X 2003 Turkey X 1998, 2002Indonesia X 2000, 2005 UK X 1995Ireland X 1998, 2000, 2005 US

Domestic vs. Imported Use

Only the import vector from the supply table is available:1. Assume that ratio of imported use over total use of a product is

identical across industries and final demand

2. Use information from (modified) BEC to split imports vector and assume identical ratios across industries. Different ratios for final demand.

A SIOT of imports is available (for the projection year or another year):• ‘Reverse engineer’ a use table of imports and use product/industry-

specific ratios (plus scaling)

Benchmark Use table(s) of imports is/are available:

3. Use product/industry-specific ratios for benchmark (plus scaling)

SIOT-Construction: Beta version

• Table for 3 countries: Germany, Japan, USA (’95) (→ 8A) • Assumption: BEC-corrected proportions• Sensible results, but some implausible results for

individual cells:• Negative intermediate inputs• Negative exports

• Underlying data material (use tables in basic prices) not optimal yet

• Approximations of split into use of domestic products and imported products imperfect

Testing of Methods

Four countries for which all types of data are available (IPTS/Eurostat):

Austria, Finland, Germany and Spain1.Estimate tables of use of imports and use of domestically

produced imports for 2000 (as if this information is not available), using methods 1, 2, 3a/3b.

2.Compare estimated tables to “true” tables (by means of weighted average percentage errors)

Information about performance of methods and evidence on effects of having imperfect information.

Stability of Import Ratios (Finland)

Office Machinery

Services Auxiliary to Financial Intermediation

Computer and Related Services

Stability of Import Ratios (Germany)

Coal and Lignite

WAPE (all intermediate inputs)

Row-unif BEC-corr Cell-spec(1) Cell-spec(2)Austria 3.65 3.66 1.04 2.60

Finland 12.92 12.53 1.46 1.01

Germany 0.42 0.40 0.42 0.16

Spain 1.80 0.97 1.80 0.94

Problems and Potential Solutions (I)

General conclusion: use as much information as possible, gains in accuracy can be small but are rarely negative. But: Important advantage of row-uniform ratios of imports to total use:

no negatives in use table for domestic use, if total use is positive BEC-corrected and Cell-specific ratios yield negatives (not too

many, and generally small). Example: investment office machinery products in Finland

Systematic check across countries for such products and check modify BEC if needed

Changes in inventories (often negative) have an impact

Problems and Potential Solutions (II)

Minimum Cross Entropy Approach Cell-specific import ratios as close as possible to

benchmark year(s) Constraints 1: uses of imports do not exceed total use

of the industry Constraint 2: use of imports by industries add up to

imports in the supply table

Try to get ideas of specific methods in construction of tables of imported use (SIOTs and Use Tables) by individual NSIs