SAM Multipliers: Their Interpretation and Relationship to Input-Output Multipliers

This chapter focuses on the social accounting matrix and economic models constructed from social accounting matrices. It reviews the flow of income as it is captured in a social accounting matrix (SAM) representative of the United States economy. An example of the improvement in multiplier interpretation that is offered with SAM models comes from the coefficients in the household columns. In order to construct an economic model which shows the relationship between demand shocks and changes in domestic output it is necessary to first purge the commodity rows of their import content. The basic structure of a SAM follows from the National Income and Product Accounts. The institution accounts receive factor income from the value added accounts and distribute it to government, household, or capital accounts. The chapter concludes with a discussion and comparison between SAM coefficients and Input/Output (IO) Leontief coefficients when households are treated as endogenous in IO models.