Multiplier Estimates: To Bias or Not to Bias?

14 Pages Posted: 14 Sep 2006

See all articles by Erik Dietzenbacher

Erik Dietzenbacher

University of Groningen - Department of Economics

Abstract

It is well known that multiplier estimates within an interindustry context may be biased when the input coefficients are stochastic. Several conditions have been derived under which the estimates were shown to be biased, all with the same sign. In contrast to these analytical results, however, simulations using a stochastic transactions table unexpectedly reported the unbiasedness of multiplier estimates. This note argues that the sample sizes were too small. It is shown that for increased sample sizes the multiplier estimates are all positively and significantly biased, in line with the analytical results, but the biases are very small.

Suggested Citation

Dietzenbacher, Erik, Multiplier Estimates: To Bias or Not to Bias?. Journal of Regional Science, Vol. 46, No. 4, pp. 773-786, October 2006, Available at SSRN: https://ssrn.com/abstract=930205 or http://dx.doi.org/10.1111/j.1467-9787.2006.00477.x

Erik Dietzenbacher (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 (0)50 3633813 (Phone)

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