Deflation of Input-output Tables from the User's Point of View: a Heuristic Approach

This paper considers the problem of deflating an input-output table from the viewpoint of the user. In many practical cases certain margins of this table are readily available in constant prices, whereas the entire table is not. This reduces the problem to estimating the matrix of sectoral intermediate deliveries in constant prices. The traditional approach for this purpose is based on the double deflation method. Since double deflation is sensitive to aggregation, however, it typically does not provide correct answers. Therefore, a heuristic approach is proposed as an alternative. It is based on the biproportional projection method. An empirical evaluation indicates that the heuristic approach clearly performs better.