Volume 23, Issue 3 (2023)
QJER 2023, 23(3): 189-227 |
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Shakeri Bostanabad R, Ansari V, Salami H, hoseini S S. Explaining the Role of the Financial Social Accounting Matrix in Economic Analysis. QJER 2023; 23 (3) : 8
URL: http://ecor.modares.ac.ir/article-18-65713-en.html
URL: http://ecor.modares.ac.ir/article-18-65713-en.html
1- Ph.D. student, Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran
2- Assistant Professor of Agricultural Economics, Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran , vansari@ut.ac.ir
3- Professor of Agricultural Economics, Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran
2- Assistant Professor of Agricultural Economics, Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran , vansari@ut.ac.ir
3- Professor of Agricultural Economics, Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran
Abstract: (1106 Views)
Introduction
Evaluating the effects and consequences of the policies at the macro-economic level and examining their possible weaknesses are necessary for implementing successful economic policies. For this purpose, the existence of a set of data to perform various economic analyzes enables economic policy-makers to evaluate the effects of economic policies before and after their implementation. Financial Social Accounting Matrix (FSAM) is a combination of funds flow and social accounting matrix for macroeconomics that provides details of real and financial transactions and flows. The addition of financial transactions (financial institutions and financial instruments) allows SAM to simulate the impact of exogenous economic and financial shocks on the economy. Therefore, the creation of a new data framework, new tools and methods that covers the financial market and its relationship with other economic systems is necessary to review economic policies and decisions. Therefore, the present study aims to create FSAM for Iran and, while evaluating the impact of financial accounts in economic analysis, to measure the effects of the development of raw and processed food exports on the growth of production of economic activities. Also, for updating FSAM data, in this study, the supply and use tables of Iran's economy are also updated, so that Iran's financial social accounting matrix is compiled with the most up-to-date information possible.
Methodology
Using the input-output table is necessary to compile the parts of the exchanges of the real part of the social financial accounting matrix. These tables need to be updated due to the time gap between the statistical base year and the year of their publication. Therefore, in this study, the updated supply and use table of Iran's economy for 2018 was prepared using the RAS method. After updating the supply and consumption tables, the social financial accounting matrix of Iran with dimensions of 268*268 [taking into account 126 goods and services, 79 activities, 3 factors of production (labor, land and capital), 20 household deciles (10 urban and 10 rural deciles) and 8 financial instruments (gold and special drawing rights, cash and deposits, government bonds, shares, loans, legal reserves, insurance technical reserves and other accounts receivable/payable)] was made.
Results and Discussion
According to FSAM coefficients, if the demand for crops (for any reason such as increase in government demand or export) increases by 1000 Rials, the production of agricultural activities will increase by 1039 Rials and the production of horticultural activities will increase by 80 Rials. The effect of this increase in demand on animal husbandry, forestry, fishing, mining and food production is equal to 178, 2, 21, 218 and 237 Rials, respectively. Totally, the increase in the demand of crops by 1000 Rials increases the production of the whole economy by 3746 Rials. Comparison of SAM and FSAM coefficients showed that the coefficients in all accounts in the FSAM model are higher than in the SAM model, which indicates the important role of financial flows in the economy. In order to investigate the effect of the increase in the export of the studied products on the production of the entire economy, the amount of export of these products in 2017 and their coefficients at the level of the entire economy have been used. For this purpose, an increase shock of 10% has been applied to the initial export of these products, and the results of the increase in production were calculated based on the increasing coefficients of FSAM and SAM. The results show that due to the 10% increase in the export of each of the examined products, the largest increase in production at the economic level is achieved due to the development of the export of food industry products, and the total production of the economy increases by 82901 billion Rials.
Conclusion
The results showed that the coefficients in all accounts in the FSAM model are higher than in the SAM model, which indicates the important role of financial flows in the economy. In fact, the development of integrated financial information at the national level is to understand the interrelationship between the real and financial aspects of the economy. In the framework of FSAM, the savings of the internal institutions of the society, which are not allocated to the formation of gross fixed capital, are given to the specific productive sector through the financial markets; and in a positive cycle, it leads to more investment, more production and more income, and creates a connection between the real and financial part of the economy. Therefore, these considerations in the social financial accounting matrix have increased the coefficients of the studied products. Considering the significant impact of financial flows and the effects of financial accounts and financial investment of institutions, the use of FSAM can provide a comprehensive framework for evaluating the structural characteristics of Iran's economy and the relationship between socio-economic components.
Evaluating the effects and consequences of the policies at the macro-economic level and examining their possible weaknesses are necessary for implementing successful economic policies. For this purpose, the existence of a set of data to perform various economic analyzes enables economic policy-makers to evaluate the effects of economic policies before and after their implementation. Financial Social Accounting Matrix (FSAM) is a combination of funds flow and social accounting matrix for macroeconomics that provides details of real and financial transactions and flows. The addition of financial transactions (financial institutions and financial instruments) allows SAM to simulate the impact of exogenous economic and financial shocks on the economy. Therefore, the creation of a new data framework, new tools and methods that covers the financial market and its relationship with other economic systems is necessary to review economic policies and decisions. Therefore, the present study aims to create FSAM for Iran and, while evaluating the impact of financial accounts in economic analysis, to measure the effects of the development of raw and processed food exports on the growth of production of economic activities. Also, for updating FSAM data, in this study, the supply and use tables of Iran's economy are also updated, so that Iran's financial social accounting matrix is compiled with the most up-to-date information possible.
Methodology
Using the input-output table is necessary to compile the parts of the exchanges of the real part of the social financial accounting matrix. These tables need to be updated due to the time gap between the statistical base year and the year of their publication. Therefore, in this study, the updated supply and use table of Iran's economy for 2018 was prepared using the RAS method. After updating the supply and consumption tables, the social financial accounting matrix of Iran with dimensions of 268*268 [taking into account 126 goods and services, 79 activities, 3 factors of production (labor, land and capital), 20 household deciles (10 urban and 10 rural deciles) and 8 financial instruments (gold and special drawing rights, cash and deposits, government bonds, shares, loans, legal reserves, insurance technical reserves and other accounts receivable/payable)] was made.
Results and Discussion
According to FSAM coefficients, if the demand for crops (for any reason such as increase in government demand or export) increases by 1000 Rials, the production of agricultural activities will increase by 1039 Rials and the production of horticultural activities will increase by 80 Rials. The effect of this increase in demand on animal husbandry, forestry, fishing, mining and food production is equal to 178, 2, 21, 218 and 237 Rials, respectively. Totally, the increase in the demand of crops by 1000 Rials increases the production of the whole economy by 3746 Rials. Comparison of SAM and FSAM coefficients showed that the coefficients in all accounts in the FSAM model are higher than in the SAM model, which indicates the important role of financial flows in the economy. In order to investigate the effect of the increase in the export of the studied products on the production of the entire economy, the amount of export of these products in 2017 and their coefficients at the level of the entire economy have been used. For this purpose, an increase shock of 10% has been applied to the initial export of these products, and the results of the increase in production were calculated based on the increasing coefficients of FSAM and SAM. The results show that due to the 10% increase in the export of each of the examined products, the largest increase in production at the economic level is achieved due to the development of the export of food industry products, and the total production of the economy increases by 82901 billion Rials.
Conclusion
The results showed that the coefficients in all accounts in the FSAM model are higher than in the SAM model, which indicates the important role of financial flows in the economy. In fact, the development of integrated financial information at the national level is to understand the interrelationship between the real and financial aspects of the economy. In the framework of FSAM, the savings of the internal institutions of the society, which are not allocated to the formation of gross fixed capital, are given to the specific productive sector through the financial markets; and in a positive cycle, it leads to more investment, more production and more income, and creates a connection between the real and financial part of the economy. Therefore, these considerations in the social financial accounting matrix have increased the coefficients of the studied products. Considering the significant impact of financial flows and the effects of financial accounts and financial investment of institutions, the use of FSAM can provide a comprehensive framework for evaluating the structural characteristics of Iran's economy and the relationship between socio-economic components.
Article number: 8
Article Type: Original Research |
Subject:
Financial Economics
Received: 2022/11/29 | Accepted: 2022/12/21 | Published: 2023/08/16
Received: 2022/11/29 | Accepted: 2022/12/21 | Published: 2023/08/16
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