ABSTRACT
This paper introduces a new class of supply-side multiregional input-output (MRIO) models and provides the necessary and sufficient conditions on the regional trade matrices that ensure that a generalised supply-side model will be convergent. The paper also introduces a new version of the row coefficient model, conceived as the ‘mirror image’ of the Chenery-Moses demand-side column coefficient (MRIO) model. Given that the conventional supply-side input-output model has been shown to perform equally as well as the demand side model in forecasting exercises, the supply-side MRIO model is expected to be of value for policy and planning purposes. Moreover, this model is of potential theoretical value for a broad synthesis of demand-side and supply-side (MRIO) models.
This paper presents the results of a comparison of technical coefficient stability in demand-side and supply-side input-output models using a seven-sector aggregation of the 1947,1958,1963,1967,1972, and 1977 US input-output tables. Sectoral and total output forecasts of the two models, generated with known final demand and value added figures from all subsequent tables, are compared to known output figures. Although the demand-side model performs somewhat better in terms of total output forecasts, the supply-side model provides better forecasts for a larger number of sectors. This analysis suggests that both models should be used in order to determine the extent to which an economy or a sector are demand- or supply-driven.
