On the Accuracy of RAS Method in an Emergent Economy

The goal of this paper is to check the applicability of RAS procedure (in its conventional definition) on statistical series of an emergent economy, as the Romanian one. As it is known, during transition from centrally planned system to market mechanisms, the society passes through deep restructuration, consisting in complex institutional changes, technological shifts, sectoral reallocation of productive factors, which continuously affected the input-output technical coefficients. Testing the RAS algorithm on such a volatile framework is a notable search challenge. Our empirical experiment is based on annual input-output tables for two decades (1989- 2008). In order to easier manipulate the available data base, the extended classification of economic activities containing 105 branches has been aggregated into 10 sectors. For each year, two (10x10) matrices: aij (statistically recorded technical coefficients) and raij (the same coefficients estimated using RAS method) were computed. The paper is organized in three sections. The first discusses several methodological issues of this algorithm. It also evaluates the differences between matrices aij and raij, involving both categories of accuracy measures - either the “cell-by-cell” comparison or the aggregated indicators. The second section extensively examines these measures, the presentation being systematized sectorally. Such an approach allows revealing specificities of different branches in their inter-industry co-operation. The third section sketches an overview of the obtained results and extracts some conclusions related to the problems that arise in the application of RAS method.