INPUT-OUTPUT FORECASTING OF REGIONAL AGRICULTURAL POLICY IMPACTS

Input-output coefficients and multipliers based upon them are increasingly being used to evaluate the impact of changes in agricultural policies, yet there are a number of specific difficulties with regard to their use in this context. This paper articulates various criticisms which can be made, and tests their validity by comparing multiplier forecasts with out-turns from a series of eight input-output tables describing the Welsh agricultural sector. The predictive performance deteriorates rapidly as the time between base matrix and forecast year increases; more attention needs to be paid to the forecasting of final demand, spill-over effects into other sectors, and the functional relationship between labour input and gross output.