The construction of Input-Output Coefficients

Basically, the construction of a technical coefficients matrix A is a matter of treatment of secondary products. Many establishments produce only one group of commodities, which are the primary products of the industry to which they are classified. However, some establishments produce commodities that are not among the primary products of the industry to which they belong. As a result, non-zero off-diagonal elements appear in the make matrix. Alternative treatments of secondary products rest upon the separation of outputs and inputs associated with secondary products so that they can be added to the outputs and inputs of the industry in which the secondary product is a characteristic output. Assumptions on these inputs structures imply an A-matrix of technical coefficients as a function of the use and make matrices. Sections 2 and 3 review the literature on the different methods for the treatment of secondary products. In Section 4, the choice of model to construct input-output tables is discussed in an axiomatic context both for product by product tables and industry by industry tables. Section 5 introduces a generalized form for the commodity and the industry technology models in the construction of product by product input-output tables while Section 6 does the same for the fixed product and the fixed industry sales structure models in the construction of industry by industry input-output tables. On the basis of the two latter sections, Section 7 subsequently concludes with a new suggested approach for the construction of input-output tables based on a hybrid technology model and firm empirical evidence.JRC.B.5-Circular Economy and Industrial Leadershi