Social Accounting Matrices
MODEL LAB · LABORATORY 08
Social Accounting
Matrices.
Complete the economic circuit. Connect production to factors, institutions, consumption, saving, government and external transactions inside a square accounting framework in which every expenditure becomes another account’s receipt.
BEYOND THE PRODUCTION TABLE
From output
to institutions.
An IO table explains interindustry production. A SAM embeds that production structure inside the complete generation, distribution and use of income.
Activities and commodities
Industries produce commodities using intermediate inputs and factors.
→
Factors and institutions
Labour and capital income is distributed to households, firms and government.
→
Consumption and saving
Institutions purchase commodities, transfer resources and finance capital formation.
THE SAM ARCHITECTURE
Each account has
two economic stories.
Activities & commodities
Record production costs, output supply, intermediate use and final demand.
Factors
Receive value added from activities and distribute labour and capital income.
Households
Receive factor income and transfers; spend on consumption, taxes and saving.
Government
Receives taxes and pays for consumption, transfers and public saving.
Capital
Collects institutional saving and finances investment and net lending.
Rest of world
Records imports, exports, factor income, transfers and external balances.
READ ACROSS
Rows receive
A cell records a receipt of the row account from the column account.
READ DOWN
Columns pay
The same cell records an expenditure by the column account to the row account.
MINI-SAM CONSTRUCTION LAB
Complete and audit
the circular accounts.
Set production, factor distribution and institutional flows. ECONORIA constructs a compact SAM and audits the activity, factor and household accounts.
| RECEIVER ↓ / PAYER → | Production | Factors | Households | Government | Capital | ROW |
|---|---|---|---|---|---|---|
| Production | 120 | — | 180 | 55 | 45 | 40 |
| Factors | 320 | — | — | — | — | — |
| Households | — | 320 | — | 15 | — | — |
| Government | — | — | 35 | — | — | — |
| Capital | — | — | 25 | — | — | — |
| ROW | 35 | — | — | — | — | — |
SAM AUDITAdjust the accounts to inspect whether receipts and expenditures reconcile.
SAM CONSTRUCTION DISCIPLINE
Balance is necessary.
Meaning is essential.
Fix the classification
Activities, commodities, factors and institutions must use consistent boundaries and valuation.
Reconcile sources
National accounts, IO tables, fiscal data and household surveys rarely agree without adjustment.
Document balancing
Record whether discrepancies were allocated manually, through RAS, cross-entropy or another method.
Protect distributions
Aggregate equality must not erase heterogeneity across household groups, factors or regions.
SCIENTIFIC CHECKPOINT
How is a SAM cell
read?
If the household row and factor column contains labour income, what does the cell record?
Remember the convention: rows receive; columns pay.
Continue to Laboratory 9: Distribution and SAM Multipliers →
