Business Intelligence

Hypothetical Integration In A Social Accounting Matrix And Fixed-Price Multiplier Analysis

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Executive Summary

This paper proposes a simple modification to a Social Accounting Matrix (SAM) in order to analyze the multiplier effects of a new sector. A different input composition, or technology, of the sector makes a conventional analysis of final-demand injections on existing sectors invalid. The authors show that the modification - so-called hypothetical integration - is an efficient way to incorporate the difference into the SAM, rather than costly full-scale rebalancing. They apply this method to the case of the Expanded Public Works Programme in South Africa, and show that the proposed approach effectively represents the labor intensity requirement of the program and a new-factor income distribution.

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