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Bias and Sensitivity of Multipliers

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  • Thijs ten Raa
  • Pieter Kop Jansen

Abstract

Multipliers measure the derivatives of endogenous variables with respect to exogenous shocks and are functions of the structural parameters of an economic model. Substitution of the structural parameter estimates yields a so-called derived estimate for a multiplier or any reduced-form parameter. Derived estimates are biased. This paper presents first-order approximations to the biases and sensitivities of multipliers. The good performance of a flawed formula in input-output analysis is illuminated.

Suggested Citation

  • Thijs ten Raa & Pieter Kop Jansen, 1998. "Bias and Sensitivity of Multipliers," Economic Systems Research, Taylor & Francis Journals, vol. 10(3), pages 275-284.
    • Handle: RePEc:taf:ecsysr:v:10:y:1998:i:3:p:275-284
    DOI: 10.1080/762947112
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    References listed on IDEAS

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    1. West, Guy R, 1986. "A Stochastic Analysis of an Input-Output Model," Econometrica, Econometric Society, vol. 54(2), pages 363-374, March.
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    3. ten Raa, Thijs & Steel, Mark F. J., 1994. "Revised stochastic analysis of an input-output model," Regional Science and Urban Economics, Elsevier, vol. 24(3), pages 361-371, June.
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    5. Lahiri, Sajal & Satchell, Steve, 1986. "Properties of the expected value of the leontief inverse: Some further results," Mathematical Social Sciences, Elsevier, vol. 11(1), pages 69-82, February.
    6. Jansen, Pieter S. M. Kop, 1994. "Analysis of multipliers in stochastic input-output models," Regional Science and Urban Economics, Elsevier, vol. 24(1), pages 55-74, February.
    7. Sandberg, I. W., 1978. "A criterion for the global stability of a price adjustment process," Journal of Economic Theory, Elsevier, vol. 19(1), pages 192-199, October.
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    Cited by:

    1. Umed Temurshoev, 2015. "Uncertainty treatment in input-output analysis," Working Papers 2015-004, Universidad Loyola Andalucía, Department of Economics.
    2. Juan Carlos Collado & Ferran Sancho, 2002. "Recovering Hidden Indirect Tax Rates for Improved Calibration in Multisectoral Modelling," Economic Systems Research, Taylor & Francis Journals, vol. 14(1), pages 81-88.
    3. Domingues, Edson P. & Haddad, Eduardo A. & Hewings, Geoffrey, 2008. "Sensitivity analysis in applied general equilibrium models: An empirical assessment for MERCOSUR free trade areas agreements," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 287-306, May.

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