A Matrix Approach to the Socioeconomic Activity of a Country

Susana Santos

doi:10.4236/tel.2018.85075

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.

Highlights

A Social Accounting Matrix (SAM) is presented as a tool to study the socioeconomic activity of a country
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 option of working with the National Accounts has behind a research purpose of defining a methodology that could be adopted by as many users as possible, and which could contribute to improving the knowledge about different aspects of the so-called socioeconomic activity of a country

Summary

Introduction

A Social Accounting Matrix (SAM) is presented as a tool to study the socioeconomic activity of a country. The option of working with the National Accounts has behind a research purpose of defining a methodology that could be adopted by as many users as possible, and which could contribute to improving the knowledge about different aspects of the so-called socioeconomic activity of a country This resulted from the perception that the National Accounts, on one hand, are aligned to a system that has progressively been adjusted with the aim of being improved, which conveys some confidence, mainly regarding alternative sources of information. The adoption of National Accounts as a base source of information of the SAM could contribute to producing better studies in different areas, as well as useful results for the process of policy evaluation and decision making This explains why the rules and the nomenclatures of the latest version of the SNA [1] will underlie the methodology proposed for a work at a macroeconomic level of analysis. Round, which started with Santos [9]

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