Aggregating input–output systems with minimum error. Issue 4 (2nd October 2019)

• Record Type: Journal Article
• Authors: Lenzen, Manfred
• Is Part Of: Economic systems research. Volume 31:Issue 4(2019)
• Page Start: 594
• Page End: 616
• Publication Date: 2019-10-02
• Subjects: Aggregation -- error -- structural path analysis; Input-output analysis -- Periodicals; 339.23
• DOI: 10.1080/09535314.2019.1609911
• Languages: English
• ISSNs: 0953-5314

Abstract

ABSTRACT: Recent advances in multi-region input-output (IO) table construction have led to large databases becoming available. Some of these databases currently demand too much computer memory or user cognition to be handled effectively outside high-performance environments, especially for applications such as virtual laboratories, computable general equilibrium modelling, linear programming, series expansion, or structural decomposition analysis, thus inhibiting their widespread use by analysts and decision-makers. Aggregation is an obvious solution; but there is a need for structured approaches to aggregating an IO system in a way that does not compromise the ability to effectively answer the research question at hand. In this article, I describe how structural path analysis can be used to realise a computationally inexpensive method for aggregating IO systems whilst minimising aggregation errors. I show that there exists no one-fits-all strategy, but that optimal aggregation depends on the research question at hand.