TITLE:
A Matrix Approach to the Socioeconomic Activity of a Country
AUTHORS:
Susana Santos
KEYWORDS:
Social Accounting Matrix, Input-Output Matrix, National Accounts, Socioeconomic Structure, Income Distribution, Multiplier Effects
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.5,
April
19,
2018
ABSTRACT: A Social Accounting Matrix
(SAM) is presented as a tool to study the socioeconomic activity of a country.
This activity involves the monetary or nominal flows that are measured by the
National Accounts, as well as production (organized in factors, industries and
goods and services) and institutions (organized in households, general
government, non-financial and financial corporations, non-profit institutions
serving households, and rest of the world). In order to contribute to the
definition of a methodology that can improve the knowledge of the different
aspects of this activity, the potentialities of a SAM for its reading and
interpreting are explored, as well as for carrying out experiments regarding
its functioning. Through a SAM-based approach, how to construct more or less
complex networks of linkages of the above mentioned
flows is shown, from which structural features can be evidenced and the
associated multiplier effects studied. Following an application to Portugal, it
is shown that a numerical version of a SAM, enables an empirical description of
the origin, use, and distribution of income, whereas, an algebraic version of a
SAM allows one to carry out, for example, a deeper study of the multiplier
effects associated with the institutional distribution of income. The crucial
role of the factors of production accounts is identified in this study, namely
when they establish the link between the generation and the distribution and
use of income. In this process, the important role the complementary details
that the Input-Output Matrix (IOM) can add is also identified. Thus, being the
generation of income, the result of the output of goods and services and
the associated costs, on the one hand, an industry by industry IOM can add
details regarding domestic and imported intermediate consumption by and between
industries and, on the other hand, a product by product IOM can add details
regarding the domestic and imported intermediate consumption of goods and
services.