ABSTRACT
This paper presents the results of comparative stability analysis of demand-and supply-side input-output models using the US, UK, Japanese, and Italian data, as well as an analysis of forecasts by sector. The results of comparative stability analysis of the two models was reported elsewhere. The forecasts of sectoral and total output of the two models are generated with known final demand and value added figures from subsequent tables, and are compared with known output figures for benchmark years. The results of the four studies are similar in part. The demand-side model performs somewhat better in terms of total output forecasts, but the supply-side model performs somewhat better for a larger number of sectors in all countries studied except Italy. Also, in all four countries the supply-side model provides markedly superior forecasts for ‘mature’ sectors, such as agriculture and mining. However, there are some notable differences between the US and UK, on the one hand, and Japan and Italy, on the other. In particular, the construction sector’s performance is predicted better by the supply-side model in the US and UK, whereas the demand-side model produces better construction forecasts in the case Japan and Italy. As the former two economies can be thought of as more ‘mature’ than the latter two, these different patterns of performance of the two models may provide a useful index of economic ‘maturity’ in general.
