Distribution of aggregate income in Portugal from 1995 to 2000 within a SAM (Social Accounting Matrix) framework. Modeling the household sector



1. INTRODUCTION

The Social Accounting Matrix, usually known as SAM, is the working instrument used in
this paper1 to study the effects on the economy of changes in the income of Portuguese
households from 1995 to 2000.

Compiled from the Portuguese System of National Accounts (SNA), the SAMs constructed
for the Portuguese economy from 1995 to 2000 can be seen as its matrix representation,
showing the entire circular flow of income.

As will be seen in section 2, the SAM is a square matrix in which the entries made in rows
specify incomes or receipts, whilst the entries made in columns specify outlays or
expenditures. Its design was established with the intention of emphasising the household
institutional sector and, in its treatment, attention was centred on analysing the households’
expenditures and receipts.

Section 3 shows that the SAM can be understood as a general equilibrium data system, the
modelling of which will help to quantify and analyse the effects of exogenous shocks or
changes introduced into the households’ receipts. At the same time, the whole network
through which some influences or effects of exogenous shocks are transmitted will be
identified and partly specified through the use of
structural path analysis. This analytical
technique was introduced into a SAM framework by Defourny and Thorbecke (1984), being
used to analyse intersectoral linkages between the individual accounts of the SAM by means
of the
paths along which effects travel. The technique is seen as an alternative to the so-called
traditional decomposition of multipliers, defined by Stone (1985) and Pyatt and Round
(1985), which is also used here.

Section 4 ends the article with some concluding remarks.

2. THE PORTUGUESE SAM STRUCTURE AND THE IMPORTANCE OF THE
HOUSEHOLD SECTOR

Based on the works of Graham Pyatt and his associates (Pyatt, 1988, 1991a; Pyatt and Roe,
1977; Pyatt and Round, 1985) and on the author’s own previous experience (Santos, 1999,

1 Based on the author’s papers presented to the Economic Policies in the New Millennium Conference, the
Department of Economics Seminar and the Input-Output and General Equilibrium: Data, Modelling and Policy
analysis Conference,
which were held respectively at the University of Coimbra on 16 April 2004, at the Higher
Institute of Economics and Business Administration (Lisbon) on 6 July 2004 and at the Free University of
Brussels on 2-4 September 2004.



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