A two-step approach to estimating state-to-state commodity trade flows

Abstract

A major problem in developing interregional–interindustry models, including multiregional input–output (MRIO) models, is how to combine seemingly incompatible databases. This research aims to estimate state-to-state commodity trade flow tables by major industrial sectors for the US useful for creating an MRIO-type model, the National Interstate Economic Model (NIEMO). The model is based on IMPLAN and related data for 2001. Constructing NIEMO was challenging because of the limited availability of commodity freight shipment data between the states. This helps to explain why a Chenery-Moses-type model such as NIEMO has not been developed in recent years. Two basic sets are necessary to construct NIEMO. Interregional trade tables to estimate trade coefficients by states and industry had been available from the US Commodity Transportation Survey Data since 1977, but reporting was discontinued for some years. For the years since 1993, this data deficit can be met to some extent with the recent Commodity Flow Survey (CFS) data from the Bureau of Transportation Statistics (BTS). Available since 1993, the CFS data are widely used, but they have several inherent problems. Recent attempts to estimate interregional trade flows using data from the 1997 CFS, based on IMPLAN data made this clear to us. This study suggests a new approach to estimate the trade tables between all 50 states plus D.C. and the rest of the world. These tables are assembled via a two-step method, to adjust for incomplete reported trade flows, and to update the adjusted trade flows by estimating values via a Fratar Model based on the 1997 CFS data. Reconciliation of the IMPLAN and CFS databases presents various problems that are addressed in this paper.