The Model Also Required Rebuilding Because of Transformed Economy. So We Began from a Studying

RIM – Russian interindustry model. RIM is not as young as it could be thought. Its first version was made about 15 years ago. During this period Russian economy has been changed and what is more important statistics methodology totally has been changed. Now we have another classification of industries of 45 items (General classification by kinds of economic activitity. That is ОКВЭД in russian against previous ОКОНХ). So classification has been changed and more earlier statistics has become unuseful. And this is one part of the problem. Another is that Russian statistical services continuously improve accounting techniques that not necessary reflects on data. Some deviations of later estimated measures reached 10% in the period of transforming economy. It complicated the transforming of interindustry balances from 19 to 45 industries. But this work has been done by Marat Uzyakov. He demonstrated the principles and results of constructing balances in the last conference in Cyrenia.

The model also required rebuilding because of transformed economy. So we began from a studying model. With the great help of Clopper TINY was built this year. TINY become a foundation on which RIM was based. Clopper built in Institutional accounts in RIM last year. TINY also has Institutional accounts.

The data base for RIM model is the time series of input-output tables from 1980 to 2008 in constant and current prices. They were built in national economic accounting form in breakdown of 45 industries. As Input-output tables were assessed in production prices then the Matrices of Tax, Trade, Transport margins in current prices were producedadditivelyand also brought in the model statistics.

But national accounts don’t represent some important things like personal income, disposable income, savings and so on. So we integrated io tables with institutional structure. The main institutions in the system of national accounts are Persons, Government, Business and Rest of World.

The model consists of 2 parts: real production part and nominal income one. Production and distribution are calculated in constant prices, income and redistribution of income are in current. At the beginning for every year final demand elements are calculated by econometric equations with initial approximations of factors (level of blocks №1, 5). Deflators has also initial values. Final demand and input-output coefficients are used to calculate output values at industry level by solving the system of interindustry linear equations. Then employment calculation follows. Then we pass from real part to nominal one, to the block of income and prices where calculations are in current prices (level of blocks №3). On the base of calculated data in the block of Production and distribution all industry elements of gross value added are estimates by normative equations. Knowing the value added in current prices and physical output prices are calculated by solving the price interindustry model. In the block of endogenous parameters income redistribution is shown (level of blocks №4). On the base of total income and normative equations nominal disposable income personal and industry are calculated, revenues and expenditures of consolidated budget are calculated and deflators are from prices. Then institutional accounts are calculated from disposable income and sector G (level of blocks №2). This sector of accounts fully depends on the parameters of consolidated budget. After deflating of final income of institutional accounts the described cycle can be repeated again. The process repeated until convergence is reached. The convergence criteria is approximate equity of GDP calculated in current and previous iterations with given degree of accuracy. If convergence is reached the calculations will go to next year.

Foreign trade in the RIM will be performed by the imports matrices which show imports flows to all industries. With knowledge of imports prices the industrial structure of imports will be used to calculate final demand structure.

Energy balances are going to be used in the model because they show the structure of energy consumption in economy. Energy balances have a uniform structure for all countries and was made by International Energy Agency. Disaggregation of 29th industry Electric, gas, and water utilities to separate production and distribution will allow input-output coefficients to be evaluated more accurately and improve forecasting.

Natural balances are planned to be integrated in input-output system of tables. There are tables in physical terms for metals, wood and cement. So statistics about products of basic industries are available make input-output coefficients mostly.