Comparing the aggregation bias in the input–output model and the social accounting matrix model

Abstract

In economic literature, some information deficiencies and computational complexities have traditionally been solved through the aggregation of data. In input–output (IO) modelling, researchers have been interested in aggregation since the 1950s. Extending the conventional IO aggregation approach to the social accounting matrix (SAM) framework may help to identify the effects caused by the problems of information that usually appear in the linear SAM models. This article applies the theory of IO aggregation to the SAM model and presents a comparison of the IO aggregation bias and the SAM aggregation bias.