Triangulation of Input–Output Tables Based on Mixed Integer Programs for Inter-temporal and Inter-regional Comparison of Production Structures

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    Abstract

    Understanding the industrial structure of a national or regional economy is one of the central issues in economics. The triangulation of an input–output table (IOT) can be employed to understand the production structure of an economy. Inter-temporal and inter-regional comparisons of multiple IOTs have addressed interesting and important issues pertaining to international trade, economic growth, and inter-industry relationships in the economy. Rank correlation coefficients between sector rankings obtained by solving optimization problems have been utilized to quantify similarities among production structures. However, it is well known that calculated rank correlations might be weak even if underlying structures are similar because the optimization problem inherently has multiple optimal solutions, thus leading to erroneous interpretations. This paper proposes a new method to triangulate IOTs based on mixed integer programs (MIPs) for comparing the production structures of multiple economies. The proposed new method does not suffer from non-uniqueness of optimal solutions and is consistent with maximization of the Kendall rank correlation coefficient. The application of the proposed method to the Japanese economy demonstrates stability of the Japanese production structure during 1995–2005. Comparisons of triangulated IOTs further reveal similarities in production structures of the Chinese, Japanese, and the U.S. economy for the year 2009. Electronic Supplementary Material The online version of this article (doi:10.1186/2193-2409-3-2) contains supplementary material. JEL Classification: C61, C67, L16.

    Original languageEnglish
    Article number2
    JournalJournal of Economic Structures
    Volume3
    Issue number1
    DOIs
    Publication statusPublished - 2014 Dec 1

    Fingerprint

    Triangulation
    Mixed integer program
    Rank correlation
    Optimization problem
    Correlation coefficient
    Optimal solution
    Economic growth
    National economy
    International trade
    Industry
    Regional economy
    US economy
    Ranking
    JEL classification
    Industrial structure
    Economics
    Japanese economy

    Keywords

    • Fundamental structure of production
    • Input–output table
    • Mixed integer program
    • Production structure
    • Triangularization

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Economics, Econometrics and Finance (miscellaneous)

    Cite this

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    title = "Triangulation of Input–Output Tables Based on Mixed Integer Programs for Inter-temporal and Inter-regional Comparison of Production Structures",
    abstract = "Understanding the industrial structure of a national or regional economy is one of the central issues in economics. The triangulation of an input–output table (IOT) can be employed to understand the production structure of an economy. Inter-temporal and inter-regional comparisons of multiple IOTs have addressed interesting and important issues pertaining to international trade, economic growth, and inter-industry relationships in the economy. Rank correlation coefficients between sector rankings obtained by solving optimization problems have been utilized to quantify similarities among production structures. However, it is well known that calculated rank correlations might be weak even if underlying structures are similar because the optimization problem inherently has multiple optimal solutions, thus leading to erroneous interpretations. This paper proposes a new method to triangulate IOTs based on mixed integer programs (MIPs) for comparing the production structures of multiple economies. The proposed new method does not suffer from non-uniqueness of optimal solutions and is consistent with maximization of the Kendall rank correlation coefficient. The application of the proposed method to the Japanese economy demonstrates stability of the Japanese production structure during 1995–2005. Comparisons of triangulated IOTs further reveal similarities in production structures of the Chinese, Japanese, and the U.S. economy for the year 2009. Electronic Supplementary Material The online version of this article (doi:10.1186/2193-2409-3-2) contains supplementary material. JEL Classification: C61, C67, L16.",
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