The Effect of Relative Coefficient Size on Input—Output Multipliers

Abstract

This paper provides a measure of the effect of relative coefficient size on input–output multipliers. Fourteen input–output tables, including a national table and tables for state, metropolitan region, city, rural town, and large and small rural region economies are included in experiments which measure the effect on output, income, and employment multipliers of (1) removal with replacement and (2) cumulative removal without replacement of coefficients from the A matrix. The experimental results illustrate the dominant role of the larger coefficients in multiplier formation and enable the derivation of a multiplier accuracy-maximising approach to table preparation.