Pilot Appliacation of the Dynamic Input-Output Model. Case Study of the Czech Republic 2005-2013

Abstract

The aim of this article is to provide the very first analysis in the field of dynamic Input-Output (I-O) models for the Czech Republic. This study examines the practicality of production dynamic equations for an estimation of future production enhanced for gross fixed capital formation. The principal construction element of dynamic I-O models rests on a technical capital matrix illustrating a stock of gross fixed capital in an economy. The lack of available data for this matrix challenges this study to analyze two possible computation procedures. Namely, I examine extrapolation method and method based on a transformation from matrix classification by type of fixed assets (AN) to classification by product (CPA). The results of the application part indicate notable differences between both ways of calculation. Final prognosis of the structure of production exhibits 11 to 21% deviations from the real structure of production in the five-year period and thus significantly diverges from reality. Potential sources of these problems and their solutions are discussed in the conclusion of this study.

Keywords

• Dynamic Input-Output model
• Input-Output analysis
• matrix of technical capital
• production equation