social accounting matrices and their use in economics modelling
DESCRIPTION
SOCIAL ACCOUNTING MATRICES AND THEIR USE IN ECONOMICS MODELLING. Finn Tarp Department of Economics University of Copenhagen http://www.econ.ku.dk/ftarp/. Workshop at CIEM, Hanoi, 16 January 2009. Outline. Introduction SAM: an overview from a macro perspective - PowerPoint PPT PresentationTRANSCRIPT
SOCIAL ACCOUNTING MATRICES AND THEIR USE IN ECONOMICS MODELLING
Finn TarpDepartment of EconomicsUniversity of Copenhagen
http://www.econ.ku.dk/ftarp/
Workshop at CIEM, Hanoi, 16 January 2009
2
Outline
• Introduction• SAM: an overview from a macro perspective• SAM: going back to the micro foundations• Vietnam SAMs• Conclusion
SAM from a macro perspective Overview – the basic idea The individual cells Macroeconomic accounting identities
in a SAM context
GOODSAGENT
SS-I ROW
GOODS C I E*X
AGENTS
GDP
S-I SE*CUR
R
ROW E*M
Simple Open Economy Real SAM
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Accnt.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Additional variables
Sh = Private Savings
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Accnt.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Additional variables
Sg = Government Savings
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Accnt.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Additional variables
T = Tax Payments
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Accnt.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Additional variables
Sf = Foreign Savings
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Acc.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Additional variables
G = Government Spending
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Acc.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Accounting Identities:
Mat. Bal. Y + Z = C + G + I + X
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Acc.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Accounting Identities:
Income C + T + Sh = Y
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Acc.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Accounting Identities:
Govt. Budget G + Sg = T
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Acc.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Accounting Identities:
Saving-Investment I = Sh + Sg + Sf
Social Accounting Matrices (SAMs)
Expenditures
Receipts
1 2 3 4 5 Total
1. Suppliers
- C G I X Demand
2. Households
Y - - - - Income
3. Government
- T - - -Receipts
4. Capital Acc.
- Sh Sg - Sf Savings
5. Rest of World
Z - - - - Imports
Total Suppl
yExpendi-ture
Expenditure
Invest-ment
ROW
Accounting Identities:
Trade Balance X + Sf = Z
15
Back to the microfoundations - Input-output: a three sector economy
• Input-output concept simple. Consider the production of the ith sector.
• We may isolate (1) flows xij from that industry to other industries; (2) the quantity of that production that goes to final demand, ci, and (3) total output, xi.
• Put in a transactions tableau
Economic Activities
Inputs to Agriculture
Inputs to Manu-
facturing
Inputs to Transport
Final Demand
Total Output
Agriculture 5 15 2 68 90
Manufacturing 10 20 10 40 80
Transportation 10 15 5 0 30
Labor 25 30 5 0 60
or
16
The Leontief coefficients
Leontief, the innovator of input-output analysis, uses a special production function which depends linearly on the total output variables xi. Using Leontief coefficients aij, we may
manipulate our transactions information into what is known as an input-output table:
:
or
17
Next step
Rewriting finally yields
18
One more step
denote the total output vector, the final demand vector, the unit matrix and the input-output matrix, respectively.
Introducing matrix notation, we can see how a solution may be obtained. Let
19
Key result
20
Input-output analysis: discussion
• No supply constraints• No substitution (input coefficients are constant) (marginal input
coefficients = average) – what happens in the growth process?• External economies are ruled out, constant returns to scale
assumed• If sectoral linkages weak, the IO is of limited value• What about the optimal choice of technique? -> Linear
programming …• What about feedback effects from income-expenditure behaviour
etc.? -> SAM modelling …
21
Macro policy and IO production structure relations are important
But so is wider economic structure and economic interactions between sectors and institutions of the economy, on the one hand, and between the domestic economy and the rest of the world (ROW), on the other
We want to understand these interactions to formulate appropriate policy recommendations - we need a framework (or accounting device) in which to organize our structural and institutional data
The next step: Why Build SAMs?
22
What is a SAM?
A Social Accounting Matrix (SAM) is a square matrix that builds on the input-output table - but the SAM goes further
A SAM considers not only production linkages, but tracks income-expenditure feedbacks (institutions are introduced)
Each “transactor” (such as factors of production, households, enterprises, the government and the ROW) has a row and a column – double entry national income accounting (row totals therefore equal to corresponding column total)
A SAM is a consistent data system that provides a snapshot of the economy in a given year
Note that the SAM reconciles data from different sources and we often talk about the SAM as consisting of two corresponding layers: the Macro-SAM and the Micro-SAM
23
What is a Macroeconomic SAM?
The Macro-SAM is the upper (aggregate) layer of the SAM
Try to visualize (open a door and look into an office or library)
Technically: the Macroeconomic SAM is an extension (or matrix representation) of basic national income identities:
Y + M = C + G + I + E (GNP) C + T + Sh = Y (Income) G + Sg = T (Govt. Budget) I = Sh + Sg + Sf (Savings-Investment) E + Sf = M (Trade Balance)
24
Schematic Macroeconomic SAM
Expenditures
Receipts 1 2 3 4 5 Total
1. Suppliers - C G I E Demand
2. Households Y - - - - Income
3. Government - T - - - Receipts
4. Capital Acct. - Sh Sg - Sf Savings
5. Rest of World M - - - - Imports
Total Supply Expenditure Expenditure Investment ROW
25
Generic Macro-SAM
Receipts
Expenditures
1. Activ-ties
2. Commo-dities
3.Factors 4.PrivateHouse-holds
5.Enterprises
6.Recur-rent State
7.Investment/Savings
8.Rest ofWorld
9.Total
1.Marketed production
Home cons.
Total domestic sales
2.Intermediateconsumption
Marketing margins
Private marketed sons.
State cons.
Invest-ment
ExportsTotal comm.demand
3. Value addedValue added
4.
Wages, salaries,enterprise profits
Dist.Profits, social security
Social Security, other current transfers
Net foreign transfers
Private house-hold Income
5.Gross profits
Entrpr. subsidies
Net foreign transfers
Enterp. Income
6.
Value added and otherproduction taxes
Commodity taxes
Factor taxes
Income taxes
Enterpr. taxes
Net foreign transfers
State Revenue
7.Household savings
Retained earnings
State savings
Total savings
8. ImportsEnterpr. Remitt.
Imports, remitt.
9.Total domestic payments
Total commodity supply
Total factor payments
Allocation private household income
Total entr. payments
Allocation of state revenue
Total invest-ment
Total foreign exchan-ge
26
What is a Microeconomic SAM?
The Micro-SAM is the lower (disaggregated) layer of the SAM Try to visualize (being inside an office or library - look around) Technically: each of the 81 (=9x9) cells in the macro-SAM are
disaggregated so as to capture detailed interdependencies between institutions and sectors
27
Additional remarks
SAMs are an economy-wide accounting device that captures the many interdependencies among sectors and institutions in the economy
As such SAMs are useful in their own right through inspection – descriptive analyses of the structure of the economy (at various levels of aggregation!)
And the SAMs become the basis for detailed multiplier analyses that go well beyond traditional input-output multiplier analysis
Finally, the SAMs form the informational basis for the building and calibration of (applied) computable general equilibrium (CGE) models. CGE models are important analytical tools for policy support. They
take explicit account of the importance of price-mediated resource allocation, the hallmark of a market economy – used to analyse issues such as the distribution of the benefits of growth and economic reform, including increased international economic integration
28
Multiplier Analysis
The SAM accounts can give detailed information about direct and indirect income and expenditure linkages in the economy. For the economywide SAM, one uses the basic multiplier calculation
Svv Svx
Sxv Sxx
M = (I – A)-1
where M is the square matrix of multipliers for exogenous demand changes on endogenous accounts, and A is the coefficients (expenditure) matrix of endogenous accounts (note: mij = income multiplier for i arising from j)
29
Multisectoral models: the SAM (Ghatak Table 11.1)
30
Multisectoral models: Separating the accounts (Ghatak Table 11.2)
31
The SAM multiplier (Ghatak Table 11.3 first part)
32
The SAM multiplier (Ghatak Table 11.3 second part)
33
SAM multipliers - discussion
• Fixed coefficients, no substitution• No supply constraints, demand driven (fixed price response
to exogenous change)• To capture substitution in supply and demand and price
adjustments -> CGE (but beyond scope here....)
CIEM Seminar,
Hanoi 28
October 2004
Introduction - Vietnam
Institutional background and acknowledgments The CIEM-NIAS project CIEM-DoE research collaboration GSO, Danida etc.
The 1999 and the first 2000 Vietnam Social Accounting Matrices (SAMs) (published in 2001 and 2002)
Some economic analyses carried out A reference to the international conference on
“Vietnam’s international economic integration - Opportunities and challenges" held in March 2004
http://eurasia.nias.ku.dk/ciemnias http://www.ciem.org.vn
SAM revision and updating an ongoing process
CIEM Seminar,
Hanoi 28
October 2004
Macro policy is important But so is economic structure and economic
interactions betweens sectors and institutions of the economy, on the one hand, and between Vietnam and the rest of the world (ROW), on the other
We want to understand these interactions to formulate appropriate policy recommendations - we need a framework (or accounting device) in which to organize our structural and institutional data
Why Build SAMs? A recap
Table 3.1: Dimensions of the SAM
1.Activi-ties (112)
2.Com-modi-ties (114)
3.Fac-tors (14)
4.Hou-seholds (16)
5.En-terpri-ses (3)
6.Re-current State (1+7)
7.In-vest-ment/Saving (1)
8. ROW (1)
Total
1 (112)
112 x 114
112 x 16
112 x 1
2 (114)
114 x 112
114 x 114
114 x 16
114 x 8
114 x 1
114 x 1
114 x 1
3 (14) 14 x 112
14 x 1
4 (16) 16 x 14
16 x 3 16 x 8 16 x 1 16 x 1
5 (3) 3 x 14 3 x 1 3 x 1
6 (1+7)
8 x 112
8 x 114
8 x 14 8 x 16 8 x 3 8 x 1 8 x 1
7 (1) 1 x 16 1 x 3 1 x 8 1 x 1
8 (1) 1 x 114
1 x 3 1 x 8 1x 1
Total 1 x 112
1 x 114
1 x 14 1 x 16 1 x 3 1 x 8 1 x 1 1 x 1
CIEM Seminar,
Hanoi 28
October 2004
The New 2000 Vietnam Micro-SAM - An Overview
In sum, a 269x269 matrix 112/114 domestic production
activities/commodities 14 factors of production 16 household types 3 types of enterprises (private, public, and foreign) 1 state 7 taxes 1 consolidated capital (investment/savings) account 1 balance of payments (with details on 194
international trading partners for the 114 commodities)
CIEM Seminar,
Hanoi 28
October 2004
Labour Force Disaggregation
12 labour categories:
Skilled
Unskilled
M. Skilled
Rural
FemaleMale
Factors
Skilled
Unskilled
M. Skilled
Skilled
Unskilled
M. Skilled
Skilled
Unskilled
M. Skilled
Urban
FemaleMale
CIEM Seminar,
Hanoi 28
October 2004
Household Disaggregation
16 types:
Rural Urban
Household
Self-empl non-farmer
Wage-earnersSelf-empl. farmers
Non-employed
Male Female Male Female
Self-empl non-farmer
Wage-earnersSelf-empl. farmers
Non-employed
CIEM Seminar,
Hanoi 28
October 2004
Tax disaggregation (7 categories)
Value added tax (VAT)Production tax (PTAX) Special consumption sales tax (STAX) Import tariffs (TARIFF) Factor taxes (FTAX) (divided into land
and capital factor taxes) Enterprise taxes (ETAX) Household taxes (HTAX)
On 2003 Vietnam SAM:Construction & Description
SAM Construction Methodology• Unbalanced Macro SAM (Primary Data Sources)• Balanced Macro SAM (Statistical Balancing)• Unbalanced Micro SAM (Primary Data & Macro
SAM Totals)• Balanced Micro SAM (Statistical Balancing)
2003 Vietnam SAM accounts (274)• Goods Accounts: Activities (112), Commodities
(112), Trade Margins (3) & Transportation Margins (3)
• Factor Accounts: Land (1), Labor (12) & Capital (1)• Institutional Current Accounts: Enterprises (1),
Households (16), Government (7) & Rest of World (1)
• Institutional Capital Accounts: Private (2), Government (2) & Aggregate (1)
CIEM Seminar,
Hanoi 28
October 2004
Final Remarks (1)
SAMs are an economy-wide accounting device that captures the many interdependencies among sectors and institutions in the economy
As such SAMs are useful in their own right through inspection – descriptive analyses of the structure of the economy (at various levels of aggregation!)
And the SAMs become the basis for detailed multiplier analyses that go well beyond traditional input-output multiplier analysis
CIEM Seminar,
Hanoi 28
October 2004
Final Remarks (2)
Finally, the SAMs form the informational basis for the building and calibration of (applied) computable general equilibrium (CGE) models. CGE models are important analytical tools for policy support.
They take explicit account of the importance of price-mediated resource allocation, the hallmark of a market economy, and are therefore well suited to analyse issues such as the distribution of the benefits of growth and economic reform, including increased international economic integration
A word on future SAM work, f.ex. General updating, VHLSS and new national accounts SME and household surveys Regionalization Environmental issues
44
Conclusions
• Is planning a good idea?• How has planning been imlemented in the past?• What role for planning in the future?• What is the role of SAMs?