Technology of the preferences: linking consumption expenditures to value added with minimal information

Abstract

The combination of consumption data from expenditure surveys with information contained in IO tables is a crucial step to structural change analysis. Herrendorf et al. (2013) focus the attention on applying a consistent definition of commodities on both the household and production sides —i.e. estimation of utility and production functions— when connecting models with data in any multisector general equilibrium model. The point of departure of these analyses consist, basically, on connecting the information on consumption made by households with the final demand vector (or matrix) present in the IO tables, which is then conveniently modified to produce the multipliers of interest. This process requires the construction of a concordance or bridge matrix to make this connection possible, since several issues affect the combination of these two data sources: differences in price valuation between consumption surveys and IO tables, the influence of taxes and margins or the different product classifications between these two frameworks make this combination a challenge for the researcher. ...