A new star is born: a multisectoral macroeconometric model of UK // Maurizio Grassini

Maurizio Grassini, Italy

Main idea: From IO table to Institutional accounts with the ESA 2010



Summary: the basic multisectoral model allows, through the bottom-up procedure, to reproduce some important macro variables that are the basis of macroeconometric models (GDP, households’ consumption, investments, wages, mixed incomes, etc.). To introduce behavioral functions of consumers and other institutional sectors, the accounting system of the multi-sector model (IO table) must be connected with that of institutional accounts. The paper presents the workable link with the European System or Accounts (ESA 2010).

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This presentation happened 2 September 2019, Russia, Sochi at 27th Inforum Conference.
The conference & materials: https://ecfor.ru/27th-inforum-world-conference/
Playlist with the other videos from the conference: https://www.youtube.com/playlist?list=PLJBJFs8UgQgpmWWFzqw87jdwOBQXQmLfu
Inforum’s site: http://www.inforum.umd.edu/

Inforum, or Interindustry Forecasting at the University of Maryland, was founded nearly 50 years ago by Dr. Clopper Almon, now Professor Emeritus of the University. It is dedicated to improving business planning, government policy analysis, and the general understanding of the economic environment.

The host side was the Institute of Economic Forecasting of the Russian Academy of Sciences. IEF RAS specializes in fundamental, applied and exploratory scientific research in the field of analysis and forecasting of the socio-economic prospects of Russia and its regions, and the development of recommendations and proposals with a goal to improve the quality of economic policy in Russia. The site is https://ecfor.ru.

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Notes:

From the IO model to the Institutional accounts:

— The real side and the price side of a multisectoral Inforum type model is a an identity-centered model.
— In forecasting and policy analysis, the multisectoral Inforum model turns out to be identity-constrained based
— Some sectoral endogenous variables under the IO accounting constraints are then poured into the Institutional accounts where new balancing constraints pop up.

Macrovariables ‘generated’ in the IO side used to feed Institutional accounts:

— Wages
— Social contributions
— Indirect taxes on production
— Subsidies
— Gross Operating Surplus
— Value added
— Value added is lacking in Imputed rents of owner-occupied dwellings

Institutional sectors Gross Operating Surplus:

— The allocation of the GOS recorded in the IO table among Institutional Sectors takes place in the kitchen of the Statistical Office.
— In default of any criteria to ‘model’ the allocation of the GOS to each institutional sector, in the computation of (not only) the Households’ income, the Households’ GOS is computed as a share of that of the economy.