Modern Input-Output Models as Simulation Tools for Policy-Making

Ciaschini, M. (1982). Modern Input-Output Models as Simulation Tools for Policy-Making. IIASA Collaborative Paper. IIASA, Laxenburg, Austria: CP-82-056

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Abstract

Current policy issues require economic models to play the role of rational decision schemes. The problems we face today are more complex than those of the past and the progressive fragmentation of the policy maker's role makes it increasingly necessary to have a coherent scheme forecasting and simulating alternative types of behavior.

There has been a tradition of 'macro' model-building in which the demand side is privileged. However recent events have focused interest on economic variables defined at a more detailed level, and have emphasized the need for policies to be specified at a greater level of disaggregation but consistent at the macro level. In fact macro models provided information on each final demand component but do not describe the structure of each variable. However the sectoral composition of these components is often crucial in indicating the pattern of either technological or behavioral structural change in the economy.

The study to be presented is part of the research work by the INTIMO group to build a modern 1/0 model of the INFORUM type for Italy. Some results obtained in the estimation of the investment function and In the simulation of the real side of the model are presented.

Work on input-output modeling at IIASA began in 1979 with Clopper Almon and Douglas Nyhus. During this period there has been considerable progress in the construction, linking and use of input-output models. With substantial help from IIASA and the Inter-Industry Forecasting project (INFORUM) at the University of Maryland, a self organizing network of collaborating institutions has been built up to work on the development and linkage of input-output models. A Task Force Meeting is held each year at IIASA to draw together the results obtained by the collaborating groups and to discuss future research.

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