The rectangular sector-by-technology model: not every economy produces every product and some products may rely on several technologies simultaneously.
Levine, Stephen H.
Abstract: This paper identifies a fundamental challenge in the
development of input-output databases of the world economy intended for analysis of
alternative scenarios with a model of the world economy. Primary data sources for
individual economies generally do not use the same sectoral classification schemes,
in part for lack of coordin... read moreation and also because not all economies produce all
goods. In addition, some economies produce a given good simultaneously using several
technologies, sometimes quite distinct in terms of factor requirements and cost
structures, information that can and should be retained for scenario analysis. To
accommodate the relevant information in a way that is both precise and parsimonious,
we introduce rectangular input-output matrices and a modeling framework for analyzing
them. This framework extends an existing input-output/linear programming model, the
rectangular choice-of-technology (RCOT) model, and integrates it into an existing
input-output/linear programming model of the world economy, the World Trade Model
(WTM). The desirable properties of the resulting WTM/RCOT model are illustrated
through a numerical example. This formulation requires that a criterion be specified
to choose among available options, and we discuss some alternative criteria. Square
input-output matrices and their inverses are only a special case of this more general
formulation, and we show how moving to the rectangular formulation expands the types
of questions that input-output analysts are able to address.
Keywords: world input-output database, rectangular input-output matrices, choice of technology model, World Trade Model, linear programming model.
Springer Open.read less
- Duchin, Faye, and Stephen H. Levine. "The rectangular sector-by-technology model: not every economy produces every product and some products may rely on several technologies simultaneously." Journal of Economic Structures 1, no. 1 (12, 2012): 1-11.