You are a statistical consultant for the treasury department. You have been task
ID: 3073976 • Letter: Y
Question
You are a statistical consultant for the treasury department. You have been tasked to provide an input-output analysis on the Australian sector. In particular you are to analyse the interdependence of 32 industries based on the Leontief Input-Output model. The data required for this problem can be found in the ‘Assignment Data’ excel file
You have been tasked with the following questions: Assume for questions a) to d) that all productionis consumed by the industries inside this economy (this is known as a closed economy).
a) Calculate and present the technology matrix. You will need to use the industry codes (under the sheet ‘Extra data’) in order to fit the whole table on one page.
b) What is the total production (or consumption) and expenditure in dollars for the ‘Machinery and equipment, nec’ industry?
c) Which industry has the highest consumption of its own resources? Which industry represents a significant importance to other industries? Note both industries may not necessarily be the same. Explain this finding and its consequences to the economy (ingeneral), if this industry(s) was to experience poor performance.
For the remaining questions assume this economy is now ‘open’ and thus has an external demand (e.g. from the government, export demand etc.) of the following dollar amounts for each respective industry (this information can be found under the sheet ‘Extra data’). Also assume the technology matrix developed in the prior section applies for the remaining questions.
d) Write the equation to represent the internal and external demands for ‘Basic metals’. In this equation do not include industries with zero dependency (when rounded off to 1 decimal place). Comment on this equation and particularly the coefficients contained within.
e) How much output does each industry need to produce in order to satisfy the external demands as described? Which industry has the highest dollar output? Which industry has the lowest dollar output? Present all solutions for each respective industry in a table.
f) In the latest budget the government has declared significant cuts to the ‘Transport and storage’ industry. In fact, they have decided to cut the external demand of this industry by half! Calculate the new output for this industry. Which industry outside ‘Transport and storage’ will be most heavily impacted by this change? Express this change both in dollars and percentage.
Variable TTL: Total Country AUST: Australia Time 2016 Unit US Dollar, Millions Column sector (to:) Agriculture, hunting, forestry and fishing Mining and quarrying Food products, beverages and tobacco Textiles, textile products, leather and footwear Wood and products of wood and cork Pulp, paper, paper products, printing and publishing Coke, refined petroleum products and nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals Fabricated metal products Machinery and equipment, nec Computer, Electronic and optical equipment Electrical machinery and apparatus, nec Motor vehicles, trailers and semi-trailers Other transport equipment Manufacturing nec; recycling Electricity, gas and water supply Construction Wholesale and retail trade; repairs Hotels and restaurants Transport and storage Post and telecommunications Financial intermediation Real estate activities Renting of machinery and equipment Computer and related activities R&D and other business activities Public administration and defence; compulsory social security Education Health and social work Other demands (Households consumption) Total Industry USED Row sector (from:) Agriculture, hunting, forestry and fishing 7411.5 25.8 12796.1 439.3 1117.4 746.4 0.9 124.9 519.4 1 2.3 2.5 0.7 1.3 2.5 1.4 0.8 68.5 11.9 239.6 1334.8 1149.4 34.8 12 8.5 64.6 137.3 8.3 80.1 79.1 43.2 11 8119.9 Mining and quarrying 54.5 11425 290.9 15.6 24.3 160.4 10470.8 402.8 13.5 1190.2 14065.2 55.2 55.7 21.4 58.1 31.3 18 148.8 3547.3 735.3 4661.5 149.5 585.3 112.8 31.6 136.2 21.6 79 433.1 91.9 31.2 60.7 2475.5 Food products, beverages and tobacco 872 81.9 4605.2 183.3 14.7 90.4 18.1 182.1 12.3 13.4 28.3 18 15.6 13.7 7 26.2 18.6 28.2 34.5 165.8 2474.6 4116 83.9 89.9 32.7 63.9 12 65.2 226.8 146.7 129.5 120.7 33134 Textiles, textile products, leather and footwear 56.6 57.6 82.8 668.6 12.4 108.1 7.9 55.7 17.9 17.9 18.8 47.5 17.3 15.5 8.1 32.8 32.3 181 24.8 203.3 250.9 106.5 80.4 48.5 5.9 20.4 8.8 29.1 76.2 78.4 33.6 269.8 6202.9 Wood and products of wood and cork 68.3 48.8 27.6 23.2 887.4 118.7 6.3 21.9 6.5 14.3 15.2 255.6 19.4 7.7 6.3 16.1 132.5 1143.9 32.6 4416 585.2 36.1 144.4 63.7 2.7 131.2 4.8 15.4 34 70.9 141.5 14.3 315.4 Pulp, paper, paper products, printing and publishing 176.9 245.9 1353.6 47.9 108.2 7080.4 11.4 326.5 73.3 148 40.6 151.8 108.5 165.3 54.4 116.4 43.9 76.5 202 1216.4 4858.5 652 499.4 1175 202.1 578.7 250.7 939.6 2682.8 1192.1 1565.8 641.5 12552 Coke, refined petroleum products and nuclear fuel 487.2 969.2 153.3 28.5 28.5 131.4 105 141.2 25.5 39.4 56.3 54.4 19.8 12.4 14.2 47.2 22.2 21.4 215.5 649.7 372.2 339.3 2678.5 360.5 183.8 661.4 51.2 45 457.1 153.6 42.6 86 11074.1 Chemicals and chemical products 883.6 432.9 552.2 61 102.6 1170.1 65.6 1682.3 342.7 157.7 66.5 164.3 84.5 135.2 102.2 323.7 137.7 254.9 246.1 1941.6 741.3 222.7 360.9 242.8 13.8 247.6 49 120.5 305.3 237.9 87.9 469.8 8348 Rubber and plastics products 92.9 474.7 30.1 22 9.2 203.9 4.6 88.8 419.6 9.3 23.9 49.6 417.5 80.2 58.8 582.1 75.7 111.7 250.8 681.1 757.1 242.8 97.7 271.8 2.1 25.9 10.4 150.8 242.5 923.9 37.8 231.1 218.6 Other non-metallic mineral products 93.4 84.7 287.1 5.3 41 38.5 4.8 95.5 10 1608.7 52.6 244.9 58.4 35.2 51.2 163.7 48.5 75.4 193.7 6273.6 371.2 69.8 37.3 20.9 4.1 146.3 27.5 13 57.8 56 17.9 32.8 736.4 Basic metals 27.9 438.5 46.6 34.7 63 132 14.6 78.7 15.3 110.5 4553.9 4590.2 1517.3 628.9 1166.2 1156.5 872 1023.1 98.2 3221 1190.1 42.5 64.2 54.1 5.2 249.3 15.8 22.1 94.7 59.6 19.5 29.2 374.7 Fabricated metal products 212 921.1 368.7 22.9 175.7 201.8 9.1 180.6 38.6 138.1 189.7 2004.4 611.2 118.7 228.6 352.4 297.8 325.7 390.1 6225.9 736.6 169.9 473.1 485.7 9.3 405.4 19.2 108.8 188 285.5 189.1 112.9 1422 Machinery and equipment, nec 497.6 1249.3 215.7 29.8 26 212.8 17.3 60.3 17.7 59.8 72.6 164.8 423.7 118.8 173.7 280.8 354.2 36.4 226.6 761.1 1217.7 153.1 178.5 168.2 14.3 53 31.2 87.6 409.1 167.6 95.9 97.9 1233.7 Computer, Electronic and optical equipment 76.9 170.5 44.6 7.6 5 74.9 6.7 19.8 6.1 7 17.9 51.8 144.4 404.1 165.4 93.4 395.5 37 85.5 654.7 657.1 79.3 453.9 989.9 24.3 58.3 20.7 357.2 832.9 235.2 401.1 1401.3 4997.9 Electrical machinery and apparatus, nec 48.8 76.2 48.1 3.2 3.5 49.3 4.8 16.5 15.7 8.5 16.7 44.1 334 126.3 286.5 59.5 121.3 14.5 338 818.5 303.1 31.4 100.2 325.2 8.6 41.9 8 69.3 126.7 40.6 25.5 48.9 3080.4 Motor vehicles, trailers and semi-trailers 57.7 66 19.7 3.9 3.1 16.9 2.8 7.4 3.3 11 11.4 20.6 51.3 13 18.3 1926.4 21.7 38.5 18.8 262.7 1903.6 36.3 999.3 187.6 5.8 25.8 6.1 42.6 104.3 77.7 46 15.7 12587.8 Other transport equipment 89.8 259 14.5 2.4 3.4 31.2 1.9 14.3 5.4 4.2 6.4 9.8 28.8 4.5 4.4 13.2 1522.5 12.8 8 233.3 354.8 14.1 3141.8 11.5 4.1 19.3 3.2 13.9 59.4 471.4 13 8 1568.2 Manufacturing nec; recycling 53.7 61.2 68.4 35.6 68.9 69.2 7.2 39.6 10.4 13.2 60 103.4 36.3 16.3 17.5 102.1 31.7 193.6 45 894.2 465.1 176.6 82.6 92 7 51.9 9.1 39.5 163.1 97.4 318.7 103.7 7325.1 Electricity, gas and water supply 652.5 1245.9 613.5 38.9 84.4 607.5 74.7 238 31.1 439.8 527.5 108.4 102.5 113 47.1 188.5 68.6 49.3 3898.3 3053.8 1272.8 741.5 1005.5 560.8 61.8 682 159.8 218.2 1654.4 566.1 548.8 343.9 16532.2 Construction 742.1 2580.7 254.3 16.9 76.2 288.9 139.9 79 22.6 54.9 128 75.9 50.9 55.9 26.1 89.5 71.1 26.7 2265.6 42739.4 2587.3 766.8 1509.4 1758.9 113 3558.5 115.4 423.6 1213.2 1397.9 65.8 134.9 2862.3 Wholesale and retail trade; repairs 3943.8 4543.8 8155.5 1129 809 3089 2436.5 1339.7 481.1 1015.3 3992.7 1405.6 920.6 767.8 528 2161.5 919.3 1084.1 1713 8515.3 11016.1 3824.9 6706.3 3510.4 796.5 1314 366.2 1441.5 4109.6 1999.5 1514.2 2843.1 63887.2 Hotels and restaurants 142.3 145.6 480.3 15.2 16.4 359.3 32.4 84.2 1.7 37.6 20.8 91.4 21.4 31.9 9 57.1 8.6 24.7 96 96.3 860.8 60.4 362.1 270 194.5 56.6 31.5 166.5 1390.5 394.8 113.7 16.6 35131.8 Transport and storage 2289.2 2907.8 4272.9 281.5 661.8 2952.2 330.5 968 105.8 843.6 1204 955.8 401 167.6 183.5 556.7 205.5 428.3 844.5 4742.1 12405.2 1169.5 8034.7 1429 364.9 697.7 224.8 834.6 4627.4 2358.8 718.2 638.3 13204.9 Post and telecommunications 172.3 228.3 262.4 25 46.7 598.1 19.9 89.4 7.9 98.7 27.2 136.1 147 61.3 55.5 98 27.8 67.8 378.4 1893.7 4843.3 735 1835.3 1292.7 1018.6 710.8 336.8 795.9 4286.8 1215.2 693 678 16981.3 Financial intermediation 949.9 1037.1 470.1 31 48.1 540.2 23.5 108 15.5 76.5 68.9 122 48.3 67.7 38.6 81.8 50.1 50.8 1185.8 5149.9 2979.4 511.8 1210.8 560.8 16559.5 9594.4 531.3 291.7 2693 1178.7 342.4 748.2 42746.3 Real estate activities 156.9 749.2 223.3 18.3 39.2 275.6 10.1 45.2 6 54.7 146 123.7 23.3 60.1 11.4 100.4 99.3 8.2 25.7 5457.1 6329.1 900.8 2292.8 1629.7 243.1 8847.2 2356 238 2401.6 1145.6 129.2 15.8 126329.7 Renting of machinery and equipment 568.6 529.9 187.3 20 153.3 900.2 60 61 14.6 57.6 71.9 89.2 52.9 53 20.3 112.4 38.2 66.1 240.9 1227.5 1511.2 410.5 719.2 580.1 404.2 665.8 228.2 171 1723.2 567.3 105.8 253.2 1549.4 Computer and related activities 42.9 82.7 150.4 24.1 24.2 308.1 5.5 71.4 45.2 49.1 58.7 44.1 54.6 89.3 30.4 129.3 10.8 26.7 135.8 360.2 2496.1 262.8 537.8 1912.3 1694.9 358.5 154.7 3276.6 4844.9 2775.8 787.7 252.6 3963.5 R&D and other business activities 1370.8 3339.9 1226.6 102.9 182.7 2814.7 20.9 604.2 100.6 325.8 152.6 494 473.6 529.5 323.4 877.8 174.2 200.9 1011.7 10911 13480.6 1464.9 4718.8 1145.8 2080 6601.7 856 4626.9 27498.8 3372.3 622.6 1649.7 5433.1 Public administration and defence; compulsory social security 136.6 548.8 661 73.7 108.3 2795.4 80.4 595.8 225.9 200.9 115.5 429.9 152.5 130.2 107.5 525.7 87.4 105.5 194.3 4181.8 4416.6 1871.1 5201.8 656.5 1430 2965.6 1007.4 1042 5940.8 2293.8 1028.3 795.3 4667.1 Education 14.5 51.6 41.5 9.2 4.5 52.9 3.1 17.4 1.8 13.5 6.4 12.9 11.7 11.3 5.7 18.5 2.7 3.3 48.2 91.5 139.2 30.9 107.3 23.2 198.3 79.2 25.7 106.3 541.6 136.9 222.4 60 13210 Health and social work 4.3 6.3 9.5 9.5 6.2 31.1 0.3 43.7 0.4 1.3 0.7 1.6 1.7 1.8 1 2.5 0.8 1.5 3.9 21.8 42.3 7.1 16.3 16.9 122 14.2 3.2 16.7 57.2 48.4 29.1 288.6 28067.4 -ag.ii, ,.--,,,,.”.,, ! ,Explanation / Answer
Refer to Appendix
2. What is the total production (or consumption) and expenditure in dollars for the ‘Wholesale and retail trade; repairs’ industry?Comment on whether this industry is making a profit or a loss.
The total production in dollars for Wholesale and retail trade; repairs is $105,504 while the expenditure is $94,751. As its production is higher than its expenditure, this industry is generating a profit of $10,753.20, which is calculated by subtracting expenditure from the total production. As calculated in the excel spreadsheet, this industry is generating a profit margin of 10.19% which can be calculated by dividing profit by the total production.
3. Which industry has the worst profit margins (including negatives and presented as a %), and which industry has the best profit margins?What assumption are we making when calculating these figures? Hint: do you think this an accurate way to calculate profit?
In accordance with the data, it appears as though the Health and Social Work Industry has the worst profit margins. They have lost $32,424, generating a profit margin of -1904.18%, which is extremely low compared to the other industries.
The industry with the highest profit margin is the Rubber and Plastic Products industry, in which $4,645 was generated, creating a profit margin of 58.80%.
When making these assumptions, we are assuming that this is the economy’s entire profit and profit margin, however this is inaccurate as we are only calculating for a closed economy. In order to attain an accurate result for profit we would need to calculate for an open economy so as to include all other relevant factors.
4. In percentage terms, which industry has the highest consumption of its own resources, as well as display a significant dependency to the other industries? Explain this finding and its consequences to the economy(in general), if this industry was to experience poor performance.
(IS CONSTRUCTION RELIANT ON OTHER NON-MINERAL OR VICE VERSA)
The Construction Industry has the highest consumption of its own resources as it consumes 64.53% of the capital it produces. With regard to the other industries, the ‘Other non-metallic mineral products’ industry is heavily reliant on Construction, as 62.83% of their resources are generated from the resources the Construction Industry provides. This industry is the most reliant on the Construction Industry in comparison to the others.
As a result, if the Construction industry were to experience poor performance, this would drastically affect the ‘Other non-metallic mineral products’ industry as they are heavily reliant on them. Other sectors that are dependent on Construction will also be negatively affected, consequently causing the economy to decline in productivity.
For the remaining questions assume this economy is now ‘open’ and thus has an external demand (e.g. from the government)of the following dollar amounts for each respective industry (this information can be found under the sheet ‘Extra data’). Also assume the technology matrix developed in the prior section applies for the remaining questions.
5. Write the equation to represent the internal and external demands for ‘Financial intermediation’. In this equation do not include industries with zero dependency (when rounded off to 1 decimal place).
Let a = Construction
Let b = Financial Intermediation
Let c = Real Estate Activities
Let d = R&D and other business activities
6. How much output does each industry need to produce in order to satisfy the external demands as described? Which industry has the highest dollar output? Which industry has the lowest dollar output? Present all solutions for each respective industry in a table.
7. In the latest budget the government has declared significant cuts to the ‘Machinery and equipment, nec’ industry. In fact, they have decided to cut theexternal demandof this industry by half! Calculate the new outputforthis industry.Which industryoutside ‘Machinery and equipment, nec’ will be most heavily impacted by this change? Express this change both in dollars and percentage.
(Half Machinery and Equipment industry external value then rerun calculations)
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