Input-output systemet iSMEC

Abstract:

The paper describes the new input-output system in SMEC. SMEC - Simulation Model of the Economic Council - is a macroeconometric model describing the Danish economy. The model is used by the Danish Economic Council when conducting forecasts and policy analyses. The model has just undergone a major restructuring which is described in the present paper and in two other working papers by the Secretariat of the Economic Council.

The present paper describes the overall structure of the model which includes eight production sectors. The disaggregated supply side has made it appropriate to have a structural input-output system as a fundament. Also the structure on the demand side has been changed yielding a more disaggregated description of private consumption. This has implied the reestimation of the system of consumption allocation. Some of the input-output coefficients has been modeled explicitly to allow for competition between the domestic industries and industries in competing countries. Furthermore, the estimation of import relations is described. The main idea in an input-output system is that production is driven by demand. However, some trades e.g. include the extraction of natural resources and hence are mainly driven by supply. The present paper includes a description of the special modeling of these trades.