A Revision of the Tolerable Limits Approach: Searching for the Important Coefficients

Abstract

A wide range of approaches are available for classifying coefficients according to their importance to an economy. The 'tolerable limits' approach is one that has been extensively written about. Nevertheless, it seems unsuitable for assessing the overall importance of a coefficient to an economy, but instead appears to be rather well suited for determining how much a selling sector depends upon its customers. We therefore suggest two alternative approaches for measuring a sector's importance to an economy. The first is an application of the concept of elasticity based on Sherman and Morrison's (1950) formula. The second approach applies linear programming. We compare these various alternatives using the domestic IO tables of eight European countries.Tolerable limits, elasticity, linear programming, important coefficients,

Determining the responsibility of manufacturing sectors regarding electricity consumption. The Spanish case

“…b 12 ¼ a 12 1 À a 22 À a 11 þ a 11 a 22 À a 12 a 21 : Thus, it can be observed that the quantity of direct and indirect requirements depends on, both, the technology of sector 2 (coefficients a 12 , a 22 ) and sector 1 (coefficients a 11 , a 21 ). 9 This approach is known as "error analysis" in the inputeoutput literature.…”

“…For an overview of the foundations of "error analysis", see [17,18,19,20]. See [21] for further details on the theoretical foundation of the error analysis applied in this article.…”

“…8 In order to illustrate this, let's assume an economy with only two production sectors. Its inverse Leontief matrix is: 1 À a 11 Àa 12 Àa 21 1 À a 22 21 1 À a 11 ½ ð1 À a 11 Þ ð1 À a 22 Þ À ½ðÀa 12 Þ ðÀa 21 Þ : Therefore, the direct and indirect requirements of the goods produced by, say, sector 1 when there is a unitary increase in the final demand of sector 2 can be expressed as follows:…”

Filter methods for MRIO tables: an evaluation

“…This sets a tolerable limit (TL) for the coefficients. Tarancón et al (2008) compared the tolerable limit approach with alternative approaches, based on an 'elasticity' concept or linear programming to solve a system of equations. The authors admit that, from a practical perspective, the tolerable limit approach leads to similar results compared to alternatives; however, if the aim is to identify ICs according to social welfare, which means in the context of impact on the whole economy, then the ICs on the elasticity would be preferable.…”

La articulación productiva como determinante de la trayectoria potencial de crecimiento

“…La identificación de la trayectoria potencial de crecimiento para cada país en estudio requiere, en principio, el análisis de las características estructurales de las tres economías y la identificación de aquellas actividades con mayor capacidad de influencia sobre la producción sectorial, denominadas "sectores importantes". Para ello, se emplea la metodología de los coeficientes importantes (CI) por límites tolerables (LT), englobada dentro de las diversas técnicas de los estudios de sensibilidad estructural (Tarancón, 2004;Soza, 2007;García et al, 2007;Tarancón et al, 2008), basadas en el análisis insumo-producto (IP). Dicha metodología parte del supuesto de que cada elemento en la matriz de coeficientes técnicos (a ij ) puede modificarse como producto de los cambios en la tecnología empleada por cada sector comprador de bienes intermedios ( j).…”