International Economics
Parisa Mohajeri; Ali Asghar Banouei
Abstract
Traditional trade theories and/or “Trade-in-Goods” predict that exports can generate 100% value-added which has recently been debated by Trade-in-Tasks theories. The root of these debates are referred to the existing conventional macro-economic accounting, which is expressed that expenditure ...
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Traditional trade theories and/or “Trade-in-Goods” predict that exports can generate 100% value-added which has recently been debated by Trade-in-Tasks theories. The root of these debates are referred to the existing conventional macro-economic accounting, which is expressed that expenditure components of final goods including gross exports (GE) equals to total value is consumed in each country. It means that a country’s GDP is the sum of its domestic final demand including GE. Generating 100% value added in domestic final demand may hold true but GE due to double counting may not generated 100% value added for the domestic economy. In addition to that domestic value added (DVA) has a nice property with Vertical Specialization (VS) in such a way that the sum of their shares are equal to one and therefore, can measure the degree of VS in trade. In this article, we take this issue as a starting point and for the first time try to analyze it with the following questions: What amount of DVA should be attributed to GE from Iran? What is the relationship between DVA and VS? We apply two methods of Hypothetical Extraction (HEM) and VS. Using the latest Input-Output Tables (IOTs) of 2011 and 2001 in Iran. The overall findings are as follows: One- the share of DVA in GE in 2001 is 95.02%, downs to 93.33% in 2011 and the shares of residual as an overestimation of GE are 4.98% and 6.67% for each year respectively. Second there is an inverse relationship between DVA and VS shares for both years. Third- the considerable large shares of DVA followed by small shares of VS suggest that Iranian economy is at the beginning of production chains with non-symmetric trade pattern.
Ali Faridzad; Ali Asghar Banouei
Abstract
The present study is to indicate that the comparison between sectoral production multipliers of an input-output (I/O) model and a social accounting matrix (SAM) framework is almost impossible without taking into account accounting balances and theoretical considerations. Theoretically, the I/O model ...
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The present study is to indicate that the comparison between sectoral production multipliers of an input-output (I/O) model and a social accounting matrix (SAM) framework is almost impossible without taking into account accounting balances and theoretical considerations. Theoretically, the I/O model provides the Leontief’s production function, on the basis of which sectoral output multiplier can be derived. In a SAM, however, the combined Leontief-Keynes models dominate multipliers commonly known as accounting multiplier matrices. The inter-industry blocks of these matrices cannot be called sectoral output multipliers as in an I/O model, rather they are known as sectoral supply multipliers. Therefore, the two sectoral multipliers are of different nature and cannot be compared for assessing sectoral performance and sectoral policy analysis of the key sectors. In the light of these evidence, this important question can be posed that whether it is possible to compare sectoral multipliers of the two approaches or not? To investigate this, two databases were used, namely the conventional I/O tables and SAM. The data for both sets of tables, prepared by the Research Center of the Islamic Parliament for the year 2011, were aggregated into 21×21 sectors. The overall results indicated that sectoral output multipliers of a conventional I/O model grossly overestimated multipliers of key sectors while sectoral supply multipliers of a conventional SAM underestimated multipliers of the key sectors. To solve the problem and make sectoral multipliers of the two approaches comparable, deduction of imports has been proposed. The overall findings showed that sectoral output multipliers of a conventional I/O model were overestimated about 1.284 unit on average and sectoral supply multipliers of a conventional SAM were underestimated about 1.245 unit on average. Considering the domestic I/O model and SAM, however, it was observed that sectoral output multipliers is on an average 1.202 in domestic IOM whereas in domestic SAM sectoral output multipliers is on an average 1.237. Consequently, the two approaches were comparable in sectoral policy analysis.
