Hypothetical Integration in a Social Accounting Matrix and Fixed-Price Multiplier Analysis

Levy Economics Institute Working Paper No. 552

21 Pages Posted: 18 Dec 2008

See all articles by Kijong Kim

Kijong Kim

Levy Economics Institute of Bard College

Date Written: December 16, 2008

Abstract

This study proposes a simple modification to a Social Accounting Matrix (SAM) in order to analyze the multiplier effects of a new sector. A different input composition, or technology, of the sector makes a conventional analysis of final-demand injections on existing sectors invalid. We show that the modification - so-called hypothetical integration - is an efficient way to incorporate the difference into the SAM, rather than costly full-scale rebalancing. We apply this method to the case of the Expanded Public Works Programme in South Africa, and show that the proposed approach effectively represents the labor intensity requirement of the program and a new-factor income distribution.

Keywords: Hypothetical Integration, Multiplier Analysis, Social Accounting Matrix, Social Sector Intervention, Expanded Public Works Programme, South Africa

JEL Classification: C67, D57, E24, E62, H51, H52

Suggested Citation

Kim, Kijong, Hypothetical Integration in a Social Accounting Matrix and Fixed-Price Multiplier Analysis (December 16, 2008). Levy Economics Institute Working Paper No. 552, Available at SSRN: https://ssrn.com/abstract=1317015 or http://dx.doi.org/10.2139/ssrn.1317015

Kijong Kim (Contact Author)

Levy Economics Institute of Bard College ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States
8457587738 (Phone)
8457581149 (Fax)

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