Tests of the static, open input-output model: an appraisal

As was pointed out in the introduction, measures of dispersion, such as standard errors, have never been calculated for the estimated coefficients in a cross-sectionally based interindustry model. However, empirical inputoutput models have been subjected to other types of experiments in order to determine their effectiveness in representing actual economic systems. The purpose of this chapter is to review some of the more widely used experiments with a view toward showing why they have been inconclusive. Specifically, the discussion to follow will provide the groundwork for a more powerful and more comprehensive test of the input-output approach. The material presented in this chapter will be neither comprehensive in its coverage nor detailed in its evaluation. Rather, it is meant to provide a set of ideas which will be expanded in subsequent chapters.