TSCAPE: A Time Series of Consistent Accounts for Policy Evaluation Edward J. Balistreri Alan K. Fox U.S. International Trade Commission Washington, DC

Introduction Construct consistent social accounts for United States  Cover 1978 to 2001  Aggregate to two-digit SIC level Draw on variety of data sources Calibrate data for internal consistency Preserve integrity of trade, GDP data

Data Sources for TSCAPE: U.S. Department of Commerce Bureau of Economic Analysis (BEA)  Value added by factor and sector (approx. 2-digit)  Benchmark IO tables (1982, 1987, 1992, 1997)  National Income and Product Accounts (NIPA) Trade Policy Information System (TPIS)  Trade by TSUS, Schedule B ( )  Trade by HTS 10-digit ( )

Scope of TSCAPE Defined by quantity index for GDP by industry (GDPI)  Available at 2-digit level  From 1977 to present Defined by TPIS  Highly disaggregated  Available from 1978 to present

Discontinuity in Trade Data 1978 to 1988: TSUS, Sch. B to SIC 4 digit  Based on DOC concordance  Only half of lines originally mapped to SIC  DOC concordance substantially revised and extended by authors 1989 to 2001: HTS10 to SIC 4 digit  DOC concordance used unchanged No handshake between TSUS and HTS10 Discontinuity between 1988 and 1989

TSCAPE Use Matrix Architecture

TSCAPE Make Matrix Architecture

Construction of Social Accounts Calculate Complete VA matrix with GDPI data on factor payment shares by industry  Aggregate GDP is then consistent with NIPA Calculate real intermediate purchases by sector  If qUse available,  If not, use interpolated BEA IO data Build Make matrix  Convert to coefficients, interpolate  Multiply by real gross output from GDPI Calculate final demand components

Establish Consistency Value added matrix:no changes Merchandise trade:no changes Minimize loss function subject to  Zero profit condition  No excess demand  Income balance

Optimization Problem: Variables Free Variables GO i Gross output by industry IUse g,d Final demand by commodity and category (except trade) Φ i Scalar for total intermediate demand by industry Fixed Parameters TgtIUse g,d Target final demand by commodity and category TgtUse g,i Target intermediate use of commodity by industry Tgtξ d Aggregate final demand mix from NIPA accounts

Optimization Problem: Specification Subject to

Resulting Baseline Labor’s value share of GDP averages 58% Imports’ share of GDP grew from 7% to 16% Exports’ share of GDP grew from 6% to 12% Protection fell dramatically in some sectors  Electronic Equipment (down by 86%)  Industrial Machinery (down by 88%)

Gross Domestic Product Billions of 1996 Dollars

Aggregate Imports and Exports Billions of 1996 Dollars

Relative Growth of Trade and Income Index, 1978 = 1.0

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