An empirical and theoretical approach to a country's economic activity based on a Social Accounting Matrix. An application to Portugal

The economic flows measured by the national accounts, which are associated with transactions of goods, services, and assets, as well as transfers, all represent interactions between institutional units, to whom legal responsibility for their actions and the fulfilment of specific economic functions is recognized. These flows are defined by the underlying system – the System of National Accounts (SNA) as being transactions. When represented in the matrix form, depending on the classification and organization of the institutional units, at the origin and the destination of the corresponding flows, the “from-whom-to-whom” transactions can be measured and modelled, benefiting from the underlying network of linkages. By adopting the nomenclatures and rules of the current version of the above-mentioned system (SNA 2008), this study uses a top-down methodology to design a matrix representation of the above-mentioned transactions - the Social Accounting Matrix (SAM). Empirical and theoretical descriptions of the economic activity of a country (Portugal is used as the illustrative case), made possible by the use of the numerical and algebraic versions of a SAM, are adopted to approach the multiplier effects of policy measures and the corresponding economic adjustments.