Entropy estimation and interpretation of the inter-sectoral linkages of Turkish economy based on Leontief input/output model

doi:10.1108/01443580910992401

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Journal of Economic Studies

ISSN: 0144-3585

Online from: 1974

Subject Area: Economics

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Entropy estimation and interpretation of the inter-sectoral linkages of Turkish economy based on Leontief input/output model

Document Information:
Title:	Entropy estimation and interpretation of the inter-sectoral linkages of Turkish economy based on Leontief input/output model
Author(s):	Ahmet Özçam, (Department of Economics, Yeditepe University, Istanbul, Turkey)
Citation:	Ahmet Özçam, (2009) "Entropy estimation and interpretation of the inter-sectoral linkages of Turkish economy based on Leontief input/output model", Journal of Economic Studies, Vol. 36 Iss: 5, pp.490 - 507
Keywords:	Econometrics, Input/output analysis, National economy, Turkey
Article type:	Research paper
DOI:	10.1108/01443580910992401 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Acknowledgements:	The author would like to thank Professor Judge for having involved himself with the topic, and Professor Miller for commenting on the computational aspect of the entropy function. The author is also indebted to a referee of this journal for valuable comments and suggestions helping with the presentation and the structure of the paper.
Abstract:	Purpose – The purpose of this paper is to address an econometric procedure which revises and updates the technical production coefficients of latest Turkish input/output (I/O) table, as new information about sectoral productions become available. Design/methodology/approach – Both maximum entropy (ME) method, which estimates the technical production coefficients directly, and cross entropy (CE) estimation method using the Turkish 1996 I/O table as prior information are considered. Moreover, some linkage measures both traditional and relatively new ones are calculated and interpreted using the same data. Findings – Under squared error measure criterion, CE estimation method using the Turkish 1996 I/O table as prior information gives a better statistical fit than the ME method which estimates the coefficients directly. Also, Dietzenbacher and van der Linden method's linkage values are found to be in between those of the Chenery and Watanabe, and the Rasmussen methods for both backward or forward definitions using the Turkish data. Research limitations/implications – There still remains the job of collecting information about sectoral productions in the year where updating the latest I/O table is to be undertaken in order to complete the design to be used in practice. This paper suggests this vector to be estimated using some proxy or instrumental variables approaches as a topic for further research. Practical implications – During the last ten years in Turkey, the five-year state development plans losing their traditional importance and the free markets replacing them may have partly accounted for the highly infrequent constructions of such tables. However, academic researches continue to use them as a basis, and therefore an updating of the latest table using an econometric approach such as that of the paper may be necessary. Originality/value – If in practice the preparation of a new I/O table is costly and/or difficult without a political need, then an updating scheme may be valuable.