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Bayesian Updating of Input-Output Tables

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  • Lugovoy, Oleg
  • Polbin, Andrey
  • Potashnikov, Vladimir

Abstract

The paper continues efforts on developing Bayesian method of updating IO tables, presented by the authors on the 16th Annual Conference on Global Economic Analysis, and extends the methodology and results in several ways. In the current paper, we test our methodology on the “long” survey based IRIOS tables. We compare two point estimates of the Bayesian method of “unknown” IO table: posterior mode and posterior mean with estimates, which come from alternative methods popular in the literature. Than we discuss how to construct an appropriate creditable set for IO coefficients. We also upgrade and extend estimates of SUT tables for Russia. The work consists of three parts. The first part of the paper devoted to conceptual framework for updating, disaggregating and balancing IO tables. Compared to previous paper we improve our sampling methodology by using conjugate vector of Hessian matrix of prior distribution to avoid high autocorrelation of MCMC chains. In addition we use eigen values for proposal density for MCMC algorithm. This technique provides good convergence properties of Markov chains. In the second part of the current paper, we test our methodology on the “long” survey based IRIOS tables (van der Linden and Oosterhaven, 1995). We treat the last table for each country as unknown and estimate it with the Bayesian method using all previously available matrixes for constructing prior distribution. We consider two point estimates of “unknown” IO table: posterior mode and posterior mean. To find posterior mode we use nonlinear optimization techniques, to explore posterior distribution we use proposed MCMC method. Posterior mode robustly outperforms competitive methods, popular in the literature, according to different closeness statistics. Posterior mean perform slightly worse than posterior mode. We conclude that point estimate of Bayesian method at least is compatible with the other methods on real data examples. The main contribution of our method i...

Suggested Citation

  • Lugovoy, Oleg & Polbin, Andrey & Potashnikov, Vladimir, 2015. "Bayesian Updating of Input-Output Tables," Conference papers 332664, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332664
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    References listed on IDEAS

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    1. Yves Léon & Ludo Peeters & Maurice Quinqu & Yves Surry, 1999. "The use of maximum entropy to estimate input-output coefficients from regional farm accounting data," Post-Print hal-01931589, HAL.
    2. Golan, Amos & Judge, George G. & Miller, Douglas, 1996. "Maximum Entropy Econometrics," Staff General Research Papers Archive 1488, Iowa State University, Department of Economics.
    3. Golan, Amos & Judge, George & Robinson, Sherman, 1994. "Recovering Information from Incomplete or Partial Multisectoral Economic Data," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 541-549, August.
    4. Yves Léony & Ludo Peeters & Maurice Quinqu & Yves Surry, 1999. "The Use of Maximum Entropy to Estimate Input‐Output Coefficients From Regional Farm Accounting Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 425-439, September.
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