Multipliers and Supermultipliers in a Multisectoral Framework: Macroeconomic Tools After All?

Abstract

ABSTRACT The paper starts showing that the common mistake of considering Keynesian income and/or employment multipliers as sector-specific, in a multisectoral framework, is taking its way back into economics. The phenomenon coincides with the recent debate about the macroeconomic Sraffian supermultiplier and generates some new miscommunication by using similar terminology to sectoral multipliers. Thus, the aim of bringing forward the understanding that Keynesian multipliers and Sraffian supermultipliers constitute macroeconomic relations even in multisectoral models is pursued by emphasising the differences between the traditional input–output multipliers and their Keynesian counterparts and by showing the required adaptations for supermultiplier representations. Once aggregate multipliers and supermultipliers are obtained, there is no need for further multisectoral operations and all the differences in impact between economic activities must be attributed to the simple input–output multipliers. Some estimates are presented using data from the World Input-Output Database (WIOD).